10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: November 1, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-21296

PACIFIC SUNWEAR OF CALIFORNIA, INC.

(Exact name of registrant as specified in its charter)

California	95-3759463
(State of incorporation)	(I.R.S. Employer Identification No.)

3450 East Miraloma Avenue, Anaheim, CA 92806

(Address of principal executive offices and zip code)

(714) 414-4000

(Registrant’s telephone number)

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  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	¨	Accelerated Filer	ý
Non-Accelerated Filer	¨	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

On December 3, 2014, the registrant had 69,264,214 shares of Common Stock outstanding.

PACIFIC SUNWEAR OF CALIFORNIA, INC.

FORM 10-Q

For the Quarter Ended November 1, 2014

Index

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited):
Condensed Consolidated Balance Sheets—November 1, 2014 and February 1, 2014	3
Condensed Consolidated Statements of Operations and Comprehensive Operations—Third quarters (13 weeks) and first three quarters (39 weeks) ended November 1, 2014 and November 2, 2013	4
Condensed Consolidated Statements of Cash Flows—First three quarters (39 weeks) ended November 1, 2014 and November 2, 2013	5
Notes to Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures about Market Risk	22
Item 4. Controls and Procedures	22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	23
Item 1A. Risk Factors	23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3. Defaults Upon Senior Securities	23
Item 4. Mine Safety Disclosures	23
Item 5. Other Information	23
Item 6. Exhibits	24
SIGNATURE PAGE	25
EX-31.1
EX-32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT
EX-101 LABEL LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PACIFIC SUNWEAR OF CALIFORNIA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, All Amounts in Thousands Except Share and Per Share Amounts)
	November 1, 2014			February 1, 2014
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	12,279		$	27,769
Inventories	129,157			83,073
Prepaid expenses	15,872			13,404
Other current assets	6,072			6,089
Total current assets	163,380			130,335
Property and equipment, net	91,485			96,797
Deferred income taxes	6,175			6,175
Intangible assets, net	10,642			12,968
Other assets	25,877			26,364
TOTAL ASSETS	$	297,559		$	272,639
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	81,637		$	46,034
Derivative liability	14,180			30,720
Other current liabilities	44,783			37,286
Total current liabilities	140,600			114,040
LONG-TERM LIABILITIES:
Deferred lease incentives	11,590			12,889
Deferred rent	14,927			15,440
Long-term debt	88,474			86,075
Other liabilities	25,808			26,046
Total long-term liabilities	140,799			140,450
Commitments and contingencies (Note 11)
SHAREHOLDERS’ EQUITY:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 1,000 shares issued and outstanding	—			—
Common stock, $0.01 par value; 170,859,375 shares authorized; 69,242,483 and 68,591,818 shares issued and outstanding, respectively	692			686
Additional paid-in capital	23,972			22,602
Accumulated deficit	(8,504		)	(5,139		)
Total shareholders’ equity	16,160			18,149
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	297,559		$	272,639

See accompanying footnotes.

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PACIFIC SUNWEAR OF CALIFORNIA, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE OPERATIONS (Unaudited, All Amounts in Thousands Except Share and Per Share Amounts)
	For the Third Quarter Ended						For the Three Quarters Ended
	November 1, 2014			November 2, 2013			November 1, 2014			November 2, 2013
Net sales	$	212,292		$	202,795		$	595,184		$	579,201
Cost of goods sold, including buying, distribution and occupancy costs	155,609			151,622			432,299			423,661
Gross margin	56,683			51,173			162,885			155,540
Selling, general and administrative expenses	58,020			52,968			170,609			162,418
Operating loss	(1,337		)	(1,795		)	(7,724		)	(6,878		)
(Gain) loss on derivative liability	(4,881		)	(23,444		)	(16,540		)	7,000
Interest expense, net	3,867			3,565			11,819			10,551
(Loss) income from continuing operations before income taxes	(323		)	18,084			(3,003		)	(24,429		)
Income tax expense	146			369			362			514
(Loss) income from continuing operations	(469		)	17,715			(3,365		)	(24,943		)
Loss from discontinued operations, net of tax effects	—			(473		)	—			(1,241		)
Net (loss) income	$	(469	)	$	17,242		$	(3,365	)	$	(26,184	)
Comprehensive (loss) income	$	(469	)	$	17,242		$	(3,365	)	$	(26,184	)
(Loss) income from continuing operations per share:
Basic	$	(0.01	)	$	0.26		$	(0.05	)	$	(0.36	)
Diluted	$	(0.01	)	$	0.24		$	(0.05	)	$	(0.36	)
Loss from discontinued operations per share:
Basic	$	0.00		$	(0.01	)	$	0.00		$	(0.02	)
Diluted	$	0.00		$	(0.01	)	$	0.00		$	(0.02	)
Net (loss) income per share:
Basic	$	(0.01	)	$	0.25		$	(0.05	)	$	(0.38	)
Diluted	$	(0.01	)	$	0.23		$	(0.05	)	$	(0.38	)
Weighted-average shares outstanding:
Basic	69,235,168			68,567,973			69,018,319			68,424,615
Diluted	69,235,168			75,515,120			69,018,319			68,424,615

See accompanying footnotes.

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PACIFIC SUNWEAR OF CALIFORNIA, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, All Amounts in Thousands)
	For the Three Quarters Ended
	November 1, 2014			November 2, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(3,365	)	$	(26,184	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	18,060			19,443
Asset impairment	3,119			2,031
Loss on disposal of property and equipment	122			60
(Gain) loss on derivative liability	(16,540		)	7,000
Amortization of debt discount	2,239			1,611
Non-cash stock-based compensation	1,202			2,200
Change in assets and liabilities:
Inventories	(46,084		)	(46,361		)
Other current assets	(2,451		)	(5,000		)
Other assets	(1,600		)	1,115
Accounts payable	35,603			27,813
Other current liabilities	7,130			(2,352		)
Deferred lease incentives	(1,299		)	(2,084		)
Deferred rent	(513		)	(406		)
Other long-term liabilities	97			4
Net cash used in operating activities	(4,280		)	(21,110		)
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Purchases of property, equipment and intangible assets	(11,320		)	(7,160		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage borrowings	618			—
Principal payments under mortgage borrowings	(422		)	(429		)
Payments for debt issuance costs	(116		)	—
Principal payments under capital lease obligations	(344		)	(347		)
Proceeds from exercise of stock options	374			240
Net cash provided by (used in) financing activities	110			(536		)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(15,490		)	(28,806		)
CASH AND CASH EQUIVALENTS, beginning of period	27,769			48,733
CASH AND CASH EQUIVALENTS, end of period	$	12,279		$	19,927
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	$	4,656		$	4,179
Cash paid for income taxes	$	874		$	601
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS:
Property and equipment purchases accrued at end of period	$	975		$	1,229

See accompanying footnotes.

5

PACIFIC SUNWEAR OF CALIFORNIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. NATURE OF BUSINESS

Pacific Sunwear of California, Inc. (together with its wholly-owned subsidiaries, the “Company” or “PacSun”) is a leading specialty retailer rooted in the action sports, fashion and music influences of the California lifestyle. The Company sells a combination of branded and proprietary casual apparel, accessories and footwear designed to appeal to teens and young adults. It operates a nationwide, primarily mall-based chain of retail stores under the names “Pacific Sunwear” and “PacSun.” In addition, the Company operates an e-commerce website at www.pacsun.com which sells PacSun merchandise online, provides content and community for its target customers and provides information about the Company. The Company, a California corporation, was incorporated in August 1982. As of November 1, 2014, the Company leased and operated 620 stores in each of the 50 states and Puerto Rico.

2. BASIS OF PRESENTATION

The accompanying Condensed Consolidated Financial Statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted.

These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2014 (“fiscal 2013”) filed with the SEC. The Condensed Consolidated Financial Statements include the accounts of Pacific Sunwear of California, Inc. and its wholly-owned subsidiaries (Pacific Sunwear Stores Corp., a California corporation (“PacSun Stores”) and Miraloma Borrower Corporation, a Delaware corporation (“Miraloma”)). All intercompany transactions have been eliminated in consolidation.

In the opinion of management, all adjustments consisting only of normal recurring entries necessary for a fair presentation have been included. The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements as well as the reported revenues and expenses during the reporting period. Actual results could differ from these estimates. The results of operations for the Company’s fiscal quarter ended and first three quarters ended November 1, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2015 (“fiscal 2014”).

The results of continuing operations for all periods presented in these Condensed Consolidated Financial Statements exclude the financial impact of discontinued operations. See Note 13, “Discontinued Operations” for further discussion related to discontinued operations presentation.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Information regarding significant accounting policies is contained in Note 1, “Nature of Business and Summary of Significant Accounting Policies,” of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for fiscal 2013. Presented below in the following notes is supplemental information that should be read in conjunction with “Notes to Consolidated Financial Statements” included in that Report.

Income Taxes

The Company calculates its interim income tax provision in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 270, “Interim Reporting” (“ASC 270”) and ASC Topic 740, “Accounting for Income Taxes” (“ASC 740”). At the end of each interim period, the Company estimates the annual effective tax rate and applies that rate to its ordinary quarterly earnings. The tax expense or benefit related to significant, unusual, or extraordinary items is recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws, rates or tax status is recognized in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including the expected operating income for the year, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets generated in the current fiscal year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or the tax environment changes.

6

Earnings Per Share

Basic earnings per share is computed using the weighted-average number of common shares outstanding. Diluted earnings per share is computed using the weighted-average number of common shares outstanding adjusted for the incremental shares attributed to outstanding options to purchase common stock and nonvested restricted stock using the treasury stock method, if dilutive. In periods where a net loss is reported, incremental shares are excluded as their effect would be anti-dilutive. In such circumstances, the weighted-average number of shares outstanding in the basic and diluted earnings per common share calculations will be the same. Anti-dilutive options and nonvested shares are excluded from the computation of diluted earnings per share because either the option exercise price or the grant date fair value of the nonvested share is greater than the market price of the Company’s common stock. Options to purchase 1.3 million shares of common stock in the third quarter of fiscal 2014, and 4.2 million and 6.6 million shares of common stock in the first three quarters of fiscal 2014 and 2013, respectively, were excluded from the computation of diluted earnings per share as their effect would have been anti-dilutive.

The table below sets forth the reconciliation of the denominator of each net (loss) income per share calculation for the third quarter and first three quarters of fiscal years 2014 and 2013:

	For the Third Quarter Ended		For the Three Quarters Ended
	(in thousands)
	November 1, 2014	November 2, 2013	November 1, 2014	November 2, 2013
Shares used in computing basic net (loss) income per share	69,235	68,568	69,018	68,425
Dilutive effect of options, restricted stock and convertible preferred stock	—	6,947	—	—
Shares used in computing diluted net (loss) income per share	69,235	75,515	69,018	68,425

Recent Accounting Pronouncements

In August 2014 the FASB issued Accounting Standards Update ("ASU") No. 2014-15, "Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern" ("ASU 2014-15"). This ASU sets forth guidance regarding management’s responsibility to (1) evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern, and (2) provide related footnote disclosures. ASU 2014-15 requires management to assess the Company’s ability to continue as a going concern by incorporating and expanding upon certain principles that currently exist in U.S. auditing standards. Specifically, this update provided a definition of the term “substantial doubt,” and added new Subtopic 205-40, Presentation of Financial Statements-Going Concern, which (1) requires an evaluation every reporting period, including interim periods, (2) sets forth principles for considering the mitigating effect of management’s plans, (3) mandates certain disclosures when substantial doubt is alleviated as a result of the consideration of management’s plans, (4) mandates an express statement, and other disclosures, when substantial doubt is not alleviated, and (5) requires an assessment for a period of one year after the date that the financial statements are issued, or are available to be issued. The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption of this ASU is permitted. The Company does not expect the adoption of ASU 2014-15 to have a material impact on its financial position or results of operations.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue From Contracts with Customers" ("ASU 2014-09"). The ASU amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The new standard is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled to when products are transferred to customers. The Company is required to adopt ASU 2014-09 for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. The new revenue accounting standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. Based on the Company's evaluation of the ASU, its adoption of this update is not expected to have a material impact on the Company's financial position or results of operations.

In April 2014, the FASB issued ASU No. 2014-08, "Presentation of Financial Statements and Property, Plant, and Equipment" and "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" ("ASU 2014-08"). The ASU amendment changes the requirements for reporting discontinued operations in Subtopic 205-20. The amendment is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2014. Early adoption is permitted. The Company has adopted ASU 2014-08 as of the beginning of its fourth fiscal quarter of 2014. Based on the Company's evaluation of the ASU, the adoption of this ASU is not expected to have a material impact on the Company's financial position or results of operations.

7

4. IMPAIRMENT OF LONG-LIVED ASSETS

The Company assesses long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets (or asset group) may not be recoverable. Based on management’s review of the historical operating performance, including sales trends, gross margin rates, current cash flows from operations and the projected outlook for each of the Company’s stores, the Company determined that certain stores would not be able to generate sufficient cash flows over the remaining term of the related leases to recover the Company’s investment in the respective stores. As a result, the Company recorded the following non-cash impairment charges related to its retail stores within the accompanying Condensed Consolidated Statements of Operations and Comprehensive Operations, to write-down the carrying value of its long-lived store assets to their estimated fair values.

	For the Third Quarter Ended				For the Three Quarters Ended
	(In thousands)
	November 1, 2014		November 2, 2013		November 1, 2014		November 2, 2013
Impairment charges from continuing operations	$	377	$	600	$	2,040	$	2,031

	November 1, 2014		November 2, 2013
	(In thousands)
Carrying value of assets tested for impairment	$	1,466	$	3,803
Carrying value of assets with impairment	$	558	$	822
Fair value of assets impaired	$	181	$	222
Number of stores tested for impairment	48		57
Number of stores with impairment	12		8

The long-lived assets disclosed above that were written down to their respective fair values consisted primarily of leasehold improvements, furniture, fixtures and equipment. The Company recognized impairment charges of $0.4 million and $0.6 million, respectively, during the third quarters ended November 1, 2014 and November 2, 2013 and $2.0 million during each of the first three quarters of fiscal 2014 and 2013, respectively. The decrease in the number of stores tested for impairment year-over-year was primarily related to the Company’s closure of certain under-performing stores and the improved financial performance of the remaining store base. Based on historical operating performance and the projected outlook for a subset of the stores tested for impairment as of November 1, 2014, the Company believes that the remaining asset value of approximately $0.2 million is recoverable. In addition, during the third quarter of 2014, the Company determined that certain software previously capitalized for internal use was abandoned. As a result, the Company recorded an impairment charge of $1.1 million and accrued approximately $0.4 million related to future software maintenance costs.

See Note 10, "Fair Value Measurements" for further discussion related to impairment of long-lived assets.

5. DERIVATIVE LIABILTY

As disclosed in Note 9, "Shareholders' Equity," the Company issued 1,000 shares of its Convertible Series B Preferred Stock (the “Series B Preferred”) in connection with the 5-year, $60 million senior secured term loan (the “Term Loan”), funded by an affiliate of Golden Gate Capital. The fair value of the Series B Preferred at issuance was approximately $15 million which was recorded as a derivative liability. As of November 1, 2014 and February 1, 2014, the fair value of the derivative liability was approximately $14 million and $31 million, respectively. See Note 10, “Fair Value Measurements” for further discussion on the derivative liability.

6. OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

	November 1, 2014		February 1, 2014
	(In thousands)
Accrued compensation and benefits	$	10,995	$	7,858
Accrued gift cards	6,066		9,036
Sales taxes payable	2,187		1,549
Other	25,535		18,843
Total other current liabilities	$	44,783	$	37,286

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7. DEBT

Credit Facility

On December 7, 2011, the Company entered into a new five-year, $100 million revolving credit facility with Wells Fargo Bank, N.A (the “Wells Credit Facility”), which replaced the Company’s previous revolving credit facility with JPMorgan Chase (the “Former Credit Facility”). Borrowings under the Wells Credit Facility bear interest at a floating rate (as defined in the Wells Credit Facility, 1.91% as of November 1, 2014) which, at the Company’s option, may be determined by reference to a LIBOR Rate or a Base Rate. Extensions of credit under the Wells Credit Facility are limited to a borrowing base consisting of specified percentages of eligible categories of assets. The Wells Credit Facility is available for direct borrowings and allows for the issuance of letters of credit, and up to $12.5 million is available for swing-line loans. The Wells Credit Facility is secured by liens and security interests with (a) a first priority security interest in the current and certain related assets of the Company including cash, cash equivalents, deposit accounts, securities accounts, credit card receivables and inventory, and (b) a second priority security interest in all assets and properties of the Company that are not secured by a first lien and security interest. The Wells Credit Facility also contains covenants that, subject to specified exceptions, restrict the Company’s ability to, among other things, incur additional indebtedness, incur liens, liquidate or dissolve, sell, transfer, lease or dispose of assets, or make loans, investments or guarantees. The Wells Credit Facility is scheduled to mature on December 7, 2016. At November 1, 2014, the Company had no direct borrowings and $9 million in letters of credit outstanding under the Wells Credit Facility. The remaining availability under the Wells Credit Facility at November 1, 2014 was approximately $49 million.

Consistent with its previous expectations, in the fourth quarter of fiscal 2014 the Company borrowed $15 million on the Wells Fargo Credit Facility to finance inventory purchases for the holiday season. The Company expects to repay such borrowings prior to the end of the fourth quarter of fiscal 2014. The Company is not subject to any financial covenant restrictions under the Wells Credit Facility. Based on current forecasts, the Company believes that its cash flows from operations and working capital, along with the availability under the Wells Credit Facility, will be sufficient to meet its operating and capital expenditure needs for the next twelve months.

Term Loan

On December 7, 2011, the Company obtained the Term Loan funded by an affiliate of Golden Gate Capital. The Term Loan bears interest at a rate of 5.50% per annum to be paid in cash, due and payable quarterly in arrears, and 7.50% per annum, due and payable in kind (“PIK”) annually in arrears, with such PIK interest then due and payable being added to the outstanding principal balance of the Term Loan at the end of each fiscal year, and with adjustments to the cash and PIK portion of the interest rate in accordance with the Term Loan agreement, following principal prepayments. Annual cash interest for fiscal 2014 is expected to be approximately $4 million. The Term Loan is guaranteed by each of the Company’s subsidiaries and will be guaranteed by any future domestic subsidiaries of the Company. The Term Loan is secured by liens and security interests with (a) a first priority security interest in all long-term assets of the Company and PacSun Stores and all other assets not subject to a first lien and security interest pursuant to the Wells Credit Facility, (b) a first priority pledge of the equity interests of Miraloma and (c) a second priority security interest in all assets of the Company and PacSun Stores subject to a first lien and security interest pursuant to the Wells Credit Facility. The Term Loan also contains covenants substantially identical to those in the Wells Credit Facility. The principal balance and any unpaid interest related to the Term Loan is due on December 7, 2016. The Company is not subject to any financial covenant restrictions under the Term Loan.

Mortgage Debt

On August 20, 2010, the Company, through its wholly-owned subsidiaries, Miraloma and PacSun Stores, executed two promissory notes pursuant to which borrowings in an aggregate amount of $29.8 million from American National Insurance Company (“Anico”) were incurred. The principal and interest payments are based on a 25-year amortization schedule, with the remaining principal balances and any accrued and unpaid interest due on September 1, 2017.

The original note executed by Miraloma (the "Miraloma Note") is secured by a deed of trust on the building and land comprising the Company’s principal executive offices in Anaheim, California and is non-recourse to the Company. The Miraloma Note does not contain any financial covenants. In connection with this transaction, the Company transferred the building and related land securing the Miraloma Note to Miraloma and entered into a lease for the building and land with Miraloma. The original note executed by PacSun Stores (the "PacSun Stores Note") is secured by a mortgage on the Company’s leasehold interest in the building and land comprising the Company’s distribution center in Olathe, Kansas, and is unconditionally guaranteed by the Company. The PacSun Stores Note does not contain any financial covenants.

On July 1, 2014, the Company modified certain terms associated with the Miraloma Note and the PacSun Stores Note. The note modification executed by Miraloma (the "New Miraloma Note”) (i) provided for an additional advance of $0.3 million to fund the payment of fees, commissions and expenses incurred by the Company in connection with the New Miraloma Note, resulting in a new principal balance of $15.9 million; (ii) extended the maturity date of the Note to July 1, 2021; (iii) reduced the interest rate to 5.25% per annum; and (iv) provided that the Note may not be prepaid prior to July 1, 2017 and thereafter may be prepaid only upon payment of prepayment fees pursuant to a schedule set forth in the note modification. The amended note executed by PacSun Stores

9

(the "New PacSun Stores Note”) (i) provided for an additional advance of $0.2 million to fund the payment of fees, commissions and expenses incurred by the Company in connection with the New PacSun Stores Note, resulting in a new principal balance of $12.3 million; (ii) extended the maturity date of the Note to July 1, 2021; (iii) reduced the interest rate to 5.25% per annum; and (iv) provided that the Note may not be prepaid prior to July 1, 2017 and thereafter may be prepaid only upon payment of prepayment fees pursuant to a schedule set forth in the note modification.

As of November 1, 2014, the remaining aggregate principal payments due under the Term Loan and the Mortgage Debt are as follows:

	(In thousands)
	2014		2015		2016		2017		2018		Thereafter		Total
Mortgage Debt	$	131	$	541	$	570	$	600	$	633	$	25,583	$	28,058
Term Loan (1)	—		—		70,293		—		—		—		70,293
Total	$	131	$	541	$	70,863	$	600	$	633	$	25,583	$	98,351
			Less: Term Loan discount										(9,343		)
			Less: current portion of long-term debt										(534		)
			Total long-term debt										$	88,474

⁽¹ Upon maturity of the Term Loan, $26.6 million of PIK interest will become due and payable, of which $10.3 million is included in the Term Loan balance and $4.0 million is accrued and included in other current liabilities as of November 1, 2014.

The Company recorded interest expense of $3.9 million and $3.6 million during the third quarters of fiscal 2014 and 2013, respectively, and $11.8 million and $10.6 million in the first three quarters of fiscal 2014 and 2013, respectively.

8. INCOME TAXES

The provisions codified within ASC 740 require companies to assess whether valuation allowances should be established against their deferred tax assets based on consideration of all available evidence using a “more likely than not” standard. In accordance with ASC 740, a full valuation allowance was established during the fourth quarter of fiscal 2009 and continues to be maintained on all federal and the majority of state deferred tax assets. Remaining net state deferred tax assets of approximately $4 million were not reserved as the Company concluded it is more likely than not that these net deferred tax assets would be utilized before expiration. The Company has discontinued recognizing federal and certain state income tax benefits until it is determined that it is more likely than not that the Company will generate sufficient taxable income to realize the deferred income tax assets.

The Company continues to monitor whether an ownership change has occurred under Internal Revenue Code Section 382 (“Section 382”). Based on available information at the reporting date, the Company believes it has not experienced an ownership change through the quarter ended November 1, 2014. The determination of whether or not an ownership change under Section 382 has occurred requires the Company to evaluate certain acquisitions and dispositions of ownership interests over a rolling three-year period. As a result, future acquisitions and dispositions could result in an ownership change of the Company under Section 382. If an ownership change were to occur, the Company’s ability to utilize federal net operating loss carryforwards could be significantly limited.

9. SHAREHOLDERS’ EQUITY

Preferred Stock

In conjunction with the Term Loan, the Company issued the Series B Preferred to an affiliate of Golden Gate Capital which, based on the initial conversion ratio, gives that affiliate the right to purchase up to 13.5 million shares of the Company’s common stock. The Series B Preferred shares have an exercise price initially equal to $1.75 per share of the Company’s underlying common stock. The initial holder of the Series B Preferred is entitled to customary registration rights with respect to the underlying common stock. See Note 10, “Fair Value Measurements – Recurring Fair Value Measurements” for further discussion on the accounting treatment of the Series B Preferred.

Stock-Based Compensation

The Company maintains two stock-based incentive plans: (1) the 2005 Performance Incentive Plan (the “Performance Plan”) and (2) the amended and restated Employee Stock Purchase Plan (the “ESPP”). The types of awards that may be granted under the Performance Plan include stock options, stock appreciation rights, restricted stock, and other forms of awards granted or denominated in the Company’s common stock or units of the Company’s common stock. Persons eligible to receive awards under the Performance Plan include officers or employees of the Company or any of its subsidiaries, directors of the Company and certain consultants and advisors to the Company or any of its subsidiaries. The vesting of awards under the Performance Plan is determined

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at the date of grant. Each award expires on a date determined at the date of grant; however, the maximum term of options and stock appreciation rights under the Performance Plan is ten years after the grant date of the award. As of November 1, 2014, the maximum number of shares of the Company’s common stock that was available for award grants under the Performance Plan was 2.8 million shares. Any shares subject to awards under prior stock plans that are canceled, forfeited or otherwise terminate without having vested or been exercised, as applicable, will become available for future award grants under the Performance Plan. The Performance Plan will terminate on March 22, 2015, unless terminated earlier by the Company’s Board of Directors.

The Company accounts for stock-based compensation expense in accordance with ASC Topic 718, “Stock Compensation”. The Company uses the Black-Scholes option-pricing model to estimate the grant date fair value of its stock options. Forfeitures are estimated at the date of grant based on historical rates and reduce the compensation expense to be recognized during the vesting period. The expected term of options granted is derived primarily from historical data on employee exercises adjusted for expected changes to option terms, if any. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant. Expected volatility is based primarily on the historical volatility of the Company’s common stock. The Company records stock-based compensation expense using the straight-line method over the vesting period, which is generally three to four years. The Company’s stock-based awards generally begin vesting one year after the grant date and, for stock options, expire in seven to ten years or three months after termination of employment with the Company. The Company’s stock-based compensation expense resulted from awards of stock options, restricted stock, and stock appreciation rights, as well as from shares issued under the ESPP.

Stock Options

Under the Performance Plan, incentive and nonqualified stock options have been granted to employees and directors to purchase common stock at prices equal to the fair value of the Company’s shares at the respective grant dates. No stock options were granted by the Company during the first three quarters of fiscal 2014 or fiscal 2013. A summary of stock option (incentive and nonqualified) activity for the first three quarters of fiscal 2014 is presented below:

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Yrs.)	Aggregate Intrinsic Value ($000s)
Outstanding at February 1, 2014	2,209,379		$	5.11
Granted	—		—
Exercised	—		—
Forfeited or expired	(280,214	)	11.64
Outstanding at November 1, 2014	1,929,165		$	4.16	2.0	$	5
Vested and expected to vest at November 1, 2014	1,926,855		$	4.17	2.0	$	5
Exercisable at November 1, 2014	1,894,254		$	4.19	2.0	$	4

There were no and 10,375 stock options exercised during the first three quarters of fiscal 2014 and 2013, respectively. The total intrinsic value of options exercised during the first three quarters of fiscal 2013 was immaterial.

Restricted Stock Awards

A summary of service-based restricted stock awards activity under the Performance Plan for the first three quarters of fiscal 2014 is presented in the following table. Except as described below, such restricted stock awards contain a service-based restriction as to vesting. These awards generally vest over 4 years with 25% of the grant vesting each year on the anniversary of the grant date.

	Shares		Weighted- Average Grant-Date Fair Value
Outstanding at February 1, 2014	1,319,571		$	2.13
Granted	100,000		2.51
Vested	(422,230	)	2.31
Forfeited	(139,483	)	2.30
Outstanding at November 1, 2014	857,858		$	2.06

The weighted-average grant-date fair value per share of service-based restricted stock awards granted during the first three quarters of fiscal 2014 and 2013 was 2.51 and $2.53, respectively. The total fair value of awards vested during the first three quarters of fiscal 2014 and 2013 was $1.2 million and $1.5 million, respectively.

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During the first quarter of fiscal 2012, the Company granted 675,000 performance-based restricted stock awards which only vest upon the achievement of certain financial targets. The weighted-average grant-date fair value per share of performance-based restricted stock awards granted during fiscal 2012 was $1.77. There were no performance-based restricted stock awards granted in the first three quarters of fiscal 2014.

Restricted Stock Units

A summary of restricted stock units activity under the Performance Plan for the first three quarters of fiscal 2014 is presented below. Restricted stock units contain a service-based restriction as to vesting. These awards generally vest 100% on the first anniversary of the grant date.

	Shares		Weighted- Average Grant-Date Fair Value
Outstanding at February 1, 2014	122,480		$	3.47
Granted	150,000		2.25
Vested	(122,480	)	3.47
Forfeited	—		—
Outstanding at November 1, 2014	150,000		$	2.25

The weighted-average grant-date fair value per share of restricted stock awards units granted during the first three quarters of fiscal 2014 and 2013 was 2.25 and $3.47, respectively. The total fair value of awards vested during the first three quarters of fiscal 2014 and 2013 was $0.3 million and $0.4 million, respectively.

Stock-based compensation expense recognized related to nonvested stock options, restricted stock awards and restricted stock units during the third quarter of fiscal 2014 and 2013 was $0.4 million and $0.5 million, respectively, and during the first three quarters of fiscal 2014 and 2013 was $1.2 million and $2.2 million, respectively.

At November 1, 2014, the Company had approximately $1.6 million of stock-based compensation cost related to non-vested stock options, service-based restricted stock awards, performance-based restricted stock awards, and restricted stock units expected to be recognized over a weighted-average period of approximately 1.7 years.

Employee Stock Purchase Plan (“ESPP”)

The Company’s ESPP provides a method for Company employees to voluntarily purchase Company common stock at a 10% discount from fair market value as of the beginning or the end of each purchasing period, whichever is lower. Historically, the Company's purchase period has been equal to six months; however, following the June 2013 ESPP purchase, the Company extended the purchase period to one year. The ESPP covers substantially all employees who have three months of service with the Company, excluding senior executives. The ESPP is intended to constitute an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended. On March 20, 2014, the Board of Directors approved an amendment to the ESPP to increase the number of authorized shares thereunder from 2.1 million shares to 2.5 million shares. Such amendment was approved by the shareholders at the 2014 annual meeting of shareholders. Shares issued under the ESPP during the first three quarters of fiscal 2014 and 2013 were 174,335 and 149,398, respectively.

10. FAIR VALUE MEASUREMENTS

The Company measures its financial assets and liabilities at fair value on a recurring basis and measures its nonfinancial assets and liabilities at fair value as required or permitted.

Fair value is defined as the price that would be received pursuant to the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. In order to determine the fair value of certain assets and liabilities, the Company applies the three-level hierarchy of valuation techniques based upon whether the inputs reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs) or reflect the Company’s assumptions of market participant valuation (unobservable inputs) and requires the use of observable inputs if such data is available without undue cost and effort. The hierarchy is as follows:

• Level 1 — quoted prices for identical instruments in active markets.

• Level 2 — inputs other than Level 1 inputs, which are observable either directly or indirectly.

• Level 3 — unobservable inputs.

Level 3 assumptions are, by their nature, inherently uncertain and the effect of changes in estimates may result in a significantly lower or higher fair value measurement.

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Recurring Fair Value Measurements

Derivative Liability

The Series B Preferred shares are required to be measured at fair value each reporting period. The fair value of the Series B Preferred shares was estimated using an option-pricing model that requires Level 3 inputs, which are highly subjective and determined using the following significant assumptions as of:

	November 1, 2014	November 2, 2013
Stock price	$1.52	$2.59
Conversion price	$1.75	$1.75
Expected volatility	76%	72%
Expected term (in years)	7.1	8.1
Risk free interest rate	2.05%	2.34%
Expected dividends	$—	$—

The following table presents the activity recorded for the derivative liability during the first three quarters ended:

	November 1, 2014			November 2, 2013
	(In thousands)
Beginning balance	$	30,720		$	20,082
(Gain) loss on change in fair value	(1,225		)	9,290
Balance at end of first quarter	29,495			29,372
(Gain) loss on change in fair value	(10,434		)	21,154
Balance at end of second quarter	19,061			50,526
(Gain) loss on change in fair value	(4,881		)	(23,444		)
Ending balance	$	14,180		$	27,082

Changes in the fair value of the derivative liability are included in (gain) loss on derivative liability in the accompanying Condensed Consolidated Statement of Operations and Comprehensive Operations.

Non-Recurring Fair Value Measurements

On a non-recurring basis, using a discounted cash flow model, the Company measures certain of its store-level long-lived assets at fair value based on Level 3 inputs including, but not limited to, comparable store sales and margin growth, projected operating costs based primarily on historical trends, and an estimated weighted-average cost of capital rate. During each of the first three quarters of fiscal 2014 and 2013 the Company recorded 2.0 million of impairment charges in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Operations. In addition, during the third quarter of 2014, the Company determined that certain software previously capitalized for internal use was abandoned. As a result, the Company recorded an impairment charge of $1.1 million and accrued approximately $0.4 million related to future software maintenance costs.

11. COMMITMENTS AND CONTINGENCIES

Litigation

Charles Pfeiffer, individually and on behalf of other aggrieved employees vs. Pacific Sunwear of California, Inc. and Pacific Sunwear Stores Corp., Superior Court of California, County of Riverside, Case No. 1100527. On January 13, 2011, the plaintiff in this matter filed a lawsuit against the Company under California’s private attorney general act alleging violations of California’s wage and hour, overtime, meal break and rest break rules and regulations, among other things. The complaint seeks an unspecified amount of damages and penalties. The Company has filed an answer denying all allegations regarding the plaintiff’s claims and asserting various defenses. The Company is currently in the discovery phase of this case. As the ultimate outcome of this matter is uncertain, no amounts have been accrued by the Company as of the date of this report. Depending on the actual outcome of this case, provisions could be recorded in the future which may have a material adverse effect on the Company’s operating results.

Tamara Beeney, individually and on behalf of other members of the general public similarly situated vs. Pacific Sunwear of California, Inc. and Pacific Sunwear Stores Corporation, Superior Court of California, County of Orange, Case No. 30-2011-00459346-CU-OE-CXC. On March 18, 2011, the plaintiff in this matter filed a putative class action lawsuit against the Company alleging violations of California’s wage and hour, overtime, meal break and rest break rules and regulations, among other things. The complaint seeks class certification, the appointment of the plaintiff as class representative, and an unspecified amount of damages and penalties. The Company has filed an answer denying all allegations regarding the plaintiff’s claims and asserting various defenses. On February 21, 2014, the plaintiff filed her motion to certify a class with respect to several claims. The Company’s opposition to such motion was filed on June 30, 2014 and the plaintiff's reply to such opposition was filed on November

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4, 2014. The hearing on the plaintiff’s motion will now be held on February 2, 2015. As the ultimate outcome of this matter is uncertain, no amounts have been accrued by the Company as of the date of this report. Depending on the actual outcome of this case, provisions could be recorded in the future which may have a material adverse effect on the Company’s operating results.

The Company is also involved from time to time in other litigation incidental to its business. The Company currently cannot assess whether the outcome of current litigation will likely have a material adverse effect on its results of operations or financial condition and, from time to time, the Company may make provisions for probable litigation losses. Depending on the actual outcome of pending litigation, charges in excess of any provisions could be recorded in the future, which may have a material adverse effect on the Company’s operating results.

Indemnities, Commitments and Guarantees

During the normal course of business, the Company agreed to certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. These indemnities, commitments and guarantees include those given to various lessors in connection with facility leases for certain claims arising from such facility or lease and indemnities to directors and officers of the Company to the maximum extent permitted under the laws of the State of California. The duration of these indemnities, commitments and guarantees varies, and in certain cases, is indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. The Company has not recorded any liability for these indemnities, commitments and guarantees in the accompanying Condensed Consolidated Balance Sheets other than as disclosed below.

Letters of Credit

The Company has issued guarantees in the form of commercial letters of credit, of which there were approximately $9 million and $10 million outstanding at November 1, 2014 and February 1, 2014, respectively, as security for merchandise shipments from overseas. All in-transit merchandise covered by letters of credit is accrued for in accounts payable.

12. SEGMENT REPORTING

The Company operates exclusively in the retail apparel industry. The Company designs, produces and distributes clothing and related products catering to teens and young adults primarily through its mall-based PacSun retail stores. The Company has identified three operating segments: PacSun stores, PacSun Outlet stores and pacsun.com. The three operating segments have been aggregated into one reportable segment based on the similar nature of products sold, production, merchandising and distribution processes involved, target customers, and economic characteristics among the three operating segments.

13. DISCONTINUED OPERATIONS

In accordance with ASC Topic 205, “Presentation of Financial Statements-Discontinued Operations”, the Company has presented the results of operations of its closed stores as discontinued operations for all periods presented. The Company closed one and three under-performing stores in the third quarters of fiscal 2014 and 2013, respectively, and three and thirteen under-performing stores in the first three quarters of fiscal 2014 and 2013, respectively. If the cash flow of the closed store was determined not to be significant to ongoing operations, and the cash inflows of nearby stores were not expected to increase significantly, the results of operations of the closed store are included in discontinued operations. The following table details the operating results included in discontinued operations for the periods presented:

	For the Third Quarter Ended			For the Three Quarters Ended
	(In thousands)
	November 2, 2013			November 2, 2013
Net sales	$	3,783		$	12,460
Cost of goods sold, including buying, distribution and occupancy costs	3,210			9,880
Gross margin	573			2,580
Selling, general and administrative expenses	1,019			3,778
Operating loss	(446		)	(1,198		)
Income tax expense	27			43
Loss from discontinued operations	$	(473	)	$	(1,241	)

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with our Condensed Consolidated Financial Statements and notes thereto included elsewhere in this Report.

Cautionary Note Regarding Forward-Looking Statements

This Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend that such forward-looking statements be subject to the safe harbors created thereby. In Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended February 1, 2014 (our “2013 Annual Report”), we provide cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in the forward-looking statements contained herein. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions, future events or performance (often, but not always, identifiable by the use of words or phrases such as “will result,” “expects to,” “will continue,” “anticipates,” “plans,” “intends,” “estimated,” “projects” and “outlook”) are not historical facts and may be forward-looking and, accordingly, such statements involve estimates, assumptions and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. Examples of forward-looking statements in this Report include, but are not limited to, the following categories of expectations about:

• the sufficiency of operating cash flows, working capital and available credit to meet our operating and capital expenditure requirements;

• our capital expenditure plans for fiscal 2014; and

• potential recording of non-cash impairment charges for under-performing stores in future quarters.

All forward-looking statements included in this Report are based on information available to us as of the date hereof, and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. See Item 1A, Risk Factors, in our 2013 Annual Report, which are hereby incorporated by reference in this Report for a discussion of these risks and uncertainties. We assume no obligation to update or revise any such forward-looking statements to reflect events or circumstances that occur after such statements are made.

Executive Overview

We consider the following items to be key indicators in evaluating our performance:

Comparable (or “same store”) sales

Stores are deemed comparable stores on the first day of the fiscal month following the one-year anniversary of their opening or expansion/relocation. We consider same store sales to be an important indicator of current Company performance. Closed stores or stores that experience closure during a relocation or remodel are removed from the store base for that period and for the same period in comparable periods. We include sales from our e-commerce business in same store sales. Same store sales results are important in achieving operating leverage of certain expenses such as store payroll, store occupancy, depreciation, general and administrative expenses and other costs that are somewhat fixed. Positive same store sales results usually generate greater operating leverage of expenses while negative same store sales results generally have a negative impact on operating leverage. Same store sales results also have a direct impact on our net sales, cash and working capital.

Net merchandise margin

We analyze the components of net merchandise margins, specifically initial markups, discounts and markdowns as a percentage of net sales. Any inability to obtain acceptable levels of initial markups or any significant increase in our use of discounts or markdowns could have an adverse impact on our gross margin results and results of operations.

Operating margin

We view operating margin as a key indicator of our success. The key drivers of operating margins are comparable store net sales, net merchandise margins, and our ability to control operating expenses. For a discussion of the changes in the components comprising operating margins, see “Results of Operations” in this section.

Store sales trends

We evaluate store sales trends in assessing the operational performance of our stores. Important store sales trends include average net sales per store, average net sales per square foot and number of transactions.

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Cash flow and liquidity (working capital)

We evaluate cash flow from operations, liquidity and working capital to determine our short-term operational financing needs. Based on current forecasts, we believe that cash flows from operations and working capital, along with the availability under the Wells Credit Facility, will be sufficient to meet our operating and capital expenditure needs for the next twelve months. Consistent with our previous expectations, in the fourth quarter of fiscal 2014 we borrowed $15 million on our Wells Fargo Credit Facility to finance inventory purchases for the holiday season. We expect to repay such borrowings prior to the end of the fourth quarter of fiscal 2014.

Critical Accounting Policies

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2013 Annual Report on Form 10-K for the year ended February 1, 2014.

Results of Operations

Continuing Operations

The following table sets forth selected income statement data from our continuing operations expressed as a percentage of net sales for the fiscal periods indicated. The table excludes discontinued operations and the discussion that follows should be read in conjunction with the table:

	For the Third Quarter Ended				For the Three Quarters Ended
	November 1, 2014		November 2, 2013		November 1, 2014		November 2, 2013
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold, including buying, distribution and occupancy costs	73.3		74.8		72.6		73.1
Gross margin	26.7		25.2		27.4		26.9
Selling, general and administrative expenses	27.3		26.1		28.7		28.1
Operating loss	(0.6	)	(0.9	)	(1.3	)	(1.2	)
(Gain) loss on derivative liability	(2.3	)	(11.6	)	(2.8	)	1.2
Interest expense, net	1.9		1.8		2.0		1.8
(Loss) income from continuing operations before income taxes	(0.2	)	8.9		(0.5	)	(4.2	)
Income tax expense	—		0.2		0.1		0.1
(Loss) income from continuing operations	(0.2	)%	8.7	%	(0.6	)%	(4.3	)%

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The third quarter (13 weeks) ended November 1, 2014 as compared to the third quarter (13 weeks) ended November 2, 2013

Net Sales

Net sales were $212.3 million for the third quarter of fiscal 2014 versus $202.8 million for the third quarter of fiscal 2013. The components of this $9.5 million increase in net sales are as follows:

$ millions		Attributable to
$	7.1	Increase in comparable store sales.
2.4		Increase in non-comparable sales.
$	9.5	Total

For the third quarter of fiscal 2014, comparable store net sales increased 4%, average sales transactions increased 9% and total transactions decreased 5%, as compared to the same period a year ago. The comparable store net sales increase resulted from a 6% increase in Men’s sales, while Women’s sales were flat. The increase in Men’s sales was driven primarily by sales of bottoms, footwear and tops. Women's sales of tops increased, offset by a decrease in non-apparel. Apparel represented 82% of total Men’s sales for the third quarter of fiscal 2014 versus 83% in the third quarter of fiscal 2013, while Women’s apparel represented 89% of total Women's sales for the third quarter of fiscal 2014 versus 87% in the third quarter of fiscal 2013. Combined accessories and footwear was 15% of total sales for each of the third quarters of fiscal 2014 and 2013.

Gross Margin

Gross margin, after buying, distribution and occupancy costs, was $56.7 million for the third quarter of fiscal 2014 versus $51.2 million for the third quarter of fiscal 2013. As a percentage of net sales, gross margin was 26.7% for the third quarter of fiscal 2014 compared to 25.2% for the third quarter of fiscal 2013. The components of this 1.5% increase in gross margin as a percentage of net sales were as follows:

%		Attributable to
1.1		Increase in merchandise margin to 49.8% from 48.7%.
0.5		Decrease in occupancy costs.
(0.1	)	Increase in buying and distribution costs.
1.5		Total

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $58.0 million for the third quarter of fiscal 2014 compared to $53.0 million for the third quarter of fiscal 2013. As a percentage of net sales, these expenses increased to 27.3% in the third quarter of fiscal 2014 from 26.1% in the third quarter of fiscal 2013. The components of this 1.2% increase in SG&A as a percentage of net sales were as follows:

%	Attributable to
0.7	Incurrence of consulting costs supporting long-term strategies, partially offset by a decrease in store payroll and payroll-related expenses and lower store impairment charges.
0.5	One-time software impairment charge, partially offset by a decrease in depreciation and amortization.
1.2	Total

We assess long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets (or asset group) may not be recoverable. Based on management’s review of the historical operating performance, including sales trends, gross margin rates, current cash flows from operations and the projected outlook for each of our stores, we determined that certain stores would not be able to generate sufficient cash flows over the remaining term of the related leases to recover our investment in the respective stores. As a result, we recorded non-cash impairment charges from continuing operations of approximately $0.4 million and $0.6 million during the third quarters of fiscal 2014 and 2013, respectively, to write-down the carrying value of certain long-lived store assets to their estimated fair values. In addition, during the third quarter of 2014 it was determined that certain software licenses were abandoned, and as a result, we recorded an asset impairment charge of $1.1 million and accrued approximately $0.4 million related to future maintenance costs.

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Gain on Derivative Liability

We recorded a non-cash gain of approximately $5 million related to our derivative liability in the third quarter of fiscal 2014, compared to a non-cash gain of approximately $23 million for the third quarter of fiscal 2013. See Note 10 to the Condensed Consolidated Financial Statements “Fair Value Measurements – Recurring Fair Value Measurements-Derivative Liability” for further discussion of the derivative liability.

Interest Expense, Net

Interest expense, net, was approximately $4 million in each of the third quarters of fiscal 2014 and 2013. Interest expense, net, for the third quarters of fiscal 2014 and 2013 was primarily related to interest costs associated with the Term Loan and mortgage debt described in Note 7 to the Condensed Consolidated Financial Statements.

Income Taxes

We recognized income tax expense of $0.1 million and $0.4 million for the third quarters of fiscal 2014 and 2013, respectively. For fiscal 2014, we expect to continue to maintain a valuation allowance against deferred tax assets resulting in minimal income tax expense for the year. Information regarding the realizability of our deferred tax assets and our assessment of a need for a valuation allowance is contained in Note 8 to the Condensed Consolidated Financial Statements.

(Loss) Income from Continuing Operations

Our loss from continuing operations for the third quarter of fiscal 2014 was approximately $0.5 million, or $0.01 per diluted share, versus income from continuing operations of approximately $17.7 million, or $0.24 per diluted share, for the third quarter of fiscal 2013. Included in the loss from continuing operations for the third quarter of fiscal 2014 was a non-cash gain of approximately $5 million, or $0.07 per diluted share related to our derivative liability, versus a non-cash gain of approximately $23 million, or $(0.31) per diluted share, for the same period a year ago.

The first three quarters (39 weeks) ended November 1, 2014 as compared to the first three quarters (39 weeks) ended November 2, 2013

Net Sales

Net sales were $595.2 million for the first three quarters of fiscal 2014 versus $579.2 million for the first three quarters of fiscal 2013. The components of this $16.0 million increase in net sales are as follows:

$ millions		Attributable to
$	11.7	Increase in comparable store sales.
4.3		Increase in non-comparable sales.
$	16.0	Total

For the first three quarters of fiscal 2014, comparable store net sales increased 2%, average sales transactions increased 7% and total transactions decreased 5%, as compared to the same period a year ago. The comparable store net sales increase was due to a 6% increase in Men’s sales, while Women’s sales decreased 2%. The increase in Men’s sales was driven by sales of tops, bottoms and footwear. The decline in Women’s sales was primarily due to a decrease in sales of non-apparel. Apparel represented 81% of total Men’s sales for the first three quarters of fiscal 2014 versus 82% in the first three quarters of fiscal 2013, while Women’s apparel represented 91% of total Women's sales for the first three quarters of fiscal 2014 versus 87% in the first three quarters of fiscal 2013. Combined accessories and footwear was 15% of total sales for the first three quarters of fiscal 2014 versus 16% in the first three quarters of fiscal 2013.

Gross Margin

Gross margin, after buying, distribution and occupancy costs, was $162.9 million for the first three quarters of fiscal 2014 versus $155.5 million for the first three quarters of fiscal 2013. As a percentage of net sales, gross margin 27.4% for the first three quarters of fiscal 2014 compared to 26.9% for the first three quarters of fiscal 2013. The components of this 0.5% increase in gross margin as a percentage of net sales was as follows:

%	Attributable to
0.5	Increase in merchandise margin to 52.0% from 51.5%.
—	Increase in buying and occupancy costs, offset by reductions in freight and other costs.
0.5	Total

Selling, General and Administrative Expenses

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Selling, general and administrative (“SG&A”) expenses were $170.6 million for the first three quarters of fiscal 2014 compared to $162.4 million for the first three quarters of fiscal 2013. As a percentage of net sales, these expenses increased to 28.7% in the first three quarters of fiscal 2014 from 28.1% in the first three quarters of fiscal 2013. The components of this 0.6% increase in SG&A as a percentage of net sales were as follows:

%		Attributable to
0.7		Incurrence of consulting costs supporting long-term strategies, partially offset by a decrease in store payroll and payroll-related expenses.
(0.1	)	One-time software impairment charge offset by a decrease in depreciation and amortization.
0.6		Total

We assess long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets (or asset group) may not be recoverable. Based on management’s review of the historical operating performance, including sales trends, gross margin rates, current cash flows from operations and the projected outlook for each of our stores, we determined that certain stores would not be able to generate sufficient cash flows over the remaining term of the related leases to recover our investment in the respective stores. As a result, we recorded non-cash impairment charges from continuing operations of approximately $2.0 million during the first three quarters of fiscal 2014 and approximately $2.0 million during the first three quarters of fiscal 2013 to write-down the carrying value of certain long-lived store assets to their estimated fair values. In addition, during the third quarter of 2014 it was determined that certain software licenses were abandoned, and as a result, we recorded an asset impairment charge of $1.1 million and accrued approximately $0.4 million related to future maintenance costs.

Gain on Derivative Liability

We recorded a non-cash gain of approximately $17 million related to our derivative liability in the first three quarters of fiscal 2014, compared to a non-cash loss of approximately $7 million for the first three quarters of fiscal 2013. See Note 10 to the Condensed Consolidated Financial Statements “Fair Value Measurements – Recurring Fair Value Measurements-Derivative Liability” for further discussion of the derivative liability.

Interest Expense, Net

Interest expense, net, was approximately $12 million and $11 million for the first three quarters of fiscal 2014 and 2013, respectively. Interest expense, net, for the first three quarters of fiscal 2014 and 2013 was primarily related to interest costs associated with the Term Loan and mortgage debt described in Note 7 to the Condensed Consolidated Financial Statements.

Income Taxes

We recognized income tax expense of $0.4 million and $0.5 million for the first three quarters of fiscal 2014 and 2013, respectively. For fiscal 2014, we expect to continue to maintain a valuation allowance against deferred tax assets resulting in minimal income tax expense for the year. Information regarding the realizability of our deferred tax assets and our assessment of a need for a valuation allowance is contained in Note 8 to the Condensed Consolidated Financial Statements.

Loss from Continuing Operations

Our loss from continuing operations for the first three quarters of fiscal 2014 was approximately $3 million, or $(0.05) per diluted share, versus a loss from continuing operations of approximately $25 million, or $(0.36) per diluted share, for the first three quarters of fiscal 2013. Included in the loss from continuing operations for the first three quarters of fiscal 2014 was a non-cash gain of approximately $17 million or $0.24 per diluted share related to our derivative liability, versus a non-cash loss of $7.0 million, or $(0.10) per diluted share, for the same period a year ago.

Liquidity and Capital Resources

We have historically financed our operations primarily from internally generated cash flow and with short-term and long-term borrowings. Our primary cash requirements have been for the financing of inventories and construction of newly opened, remodeled, expanded or relocated stores. Based on current forecasts, we believe that cash flows from operations and working capital, along with the availability under the Wells Credit Facility, will be sufficient to meet our operating and capital expenditure needs for the next twelve months. Consistent with our previous expectations, in the fourth quarter of fiscal 2014 we borrowed $15 million on our Wells Fargo Credit Facility to finance inventory purchases for the holiday season. We expect to repay such borrowings prior to the end of the fourth quarter of fiscal 2014.

19

	For the Three Quarters Ended
	November 1, 2014			November 2, 2013
	(In thousands)
Net cash provided by (used in) operating activities	$	(4,280	)	$	(21,110	)
Net cash used in investing activities	(11,320		)	(7,160		)
Net cash provided by (used in) financing activities	110			(536		)
Net decrease in cash and cash equivalents	$	(15,490	)	$	(28,806	)

Operating Cash Flows

Net cash used for operating activities in the first three quarters of fiscal 2014 was $4.3 million, compared to $21.1 million of cash used for the first three quarters of fiscal 2013. This decrease of $16.8 million was due primarily to increases in accounts payable and other current liabilities. Our primary use of cash in the first three quarters of fiscal 2014 and 2013 was to purchase merchandise inventories. Non-cash adjustments to reconcile our net loss to net cash used in operating activities were approximately $8 million in the first three quarters of fiscal 2014 and approximately $32 million in the first three quarters of fiscal 2013, and were primarily related to depreciation expense, asset impairment charges and the (gain) loss on our derivative liability in both periods.

Working Capital

Working capital at November 1, 2014, was approximately $23 million compared to approximately $16 million at February 1, 2014, an increase of approximately $7 million. The changes in working capital were as follows:

$ millions			Description
$	16		Working capital at February 1, 2014.
(15		)	Decrease in cash and cash equivalents.
11			Increase in inventories, net of accounts payable.
17			Decrease in derivative liability.
(6		)	Decrease in other current assets, net of other current liabilities.
$	23		Working capital at November 1, 2014.

Investing Cash Flows

Net cash used in investing activities in the first three quarters of fiscal 2014 was $11.3 million compared to $7.2 million used in investing activities for the first three quarters of fiscal 2013, an increase in cash outflow of $4.1 million. Investing cash outflows in the first three quarters of fiscal 2014 and 2013 were comprised of capital expenditures for refreshing existing stores and information technology investments at the store level. We expect total capital expenditures for fiscal 2014 to be approximately $16 million to $18 million.

Financing Cash Flows

Net cash provided by (used in) financing activities in the first three quarters of fiscal 2014 was $0.1 million compared to net cash used in financing activities of $0.5 million for the first three quarters of fiscal 2013. The primary uses of cash for financing activities in the first three quarters of fiscal 2014 and 2013 were principal payments under our mortgage debt and capital lease obligations. The primary source of cash from financing activities for the first three quarters of fiscal 2014 was net proceeds from the refinancing of our mortgage debt.

Wells Credit Facility

Information regarding the Wells Credit Facility is contained in Note 7 to the Condensed Consolidated Financial Statements and is incorporated herein by reference.

Term Loan

Information regarding the Term Loan is contained in Note 7 to the Condensed Consolidated Financial Statements and is incorporated herein by reference.

Mortgage Transactions

Information regarding our mortgage debt is contained in Note 7 to the Condensed Consolidated Financial Statements and is incorporated herein by reference.

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Contractual Obligations

We have minimum annual rental commitments under existing store leases as well as a minor amount of capital leases for computer equipment. We lease all of our retail store locations under operating leases. We lease equipment, from time to time, under both capital and operating leases. In addition, at any time we are contingently liable for commercial letters of credit with foreign suppliers of merchandise. At November 1, 2014, our future financial commitments under all existing contractual obligations were as follows:

	Payments Due by Period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(In millions)
Operating lease obligations	$	304	$	72	$	108	$	70	$	54
Term loan	96		4		92		—		—
Mortgage debt	37		2		4		4		27
Letters of credit	9		9		—		—		—
Guaranteed minimum royalties	5		1		2		1		1
Capital lease obligations	1		1		—		—		—
Total	$	452	$	89	$	206	$	75	$	82

Operating lease obligations consist primarily of future minimum lease commitments related to store operating leases. The contractual obligations table above does not include common area maintenance (“CAM”) charges, insurance, or tax obligations, which are also required contractual obligations under our store operating leases. In many of our leases, CAM charges are not fixed and can fluctuate significantly from year to year for any particular store. Total store rental expenses, including CAM, for the first three quarters of fiscal 2014 and fiscal 2013 were approximately $103 million and $102 million, respectively. Total CAM expenses could fluctuate from year-to-year as long-term leases come up for renewal at current market rates in excess of original lease terms and as we continue to close stores. Additional information regarding operating leases can be found below under the caption “Operating Leases.”

Obligations under our Executive Deferred Compensation Plan are equal to approximately $2 million as of November 1, 2014, and have been excluded from the contractual obligations table above as we are unable to reasonably determine the amount or the timing of the future payments.

Operating Leases

We lease our retail stores and certain equipment under operating lease agreements expiring at various dates through August 2025. Many of our retail store leases require us to pay CAM charges, insurance and property taxes. In addition, many of our retail store leases require us to pay percentage rent ranging from 2% to 20% when sales volumes exceed certain minimum sales levels. The initial terms of such leases are typically 8 to 10 years, some of which contain renewal options exercisable at our discretion. Most leases also contain rent escalation clauses that come into effect at various times throughout the lease term. Rent expense is recorded under the straight-line method over the life of the lease (see “Straight-Line Rent” in Note 1 to the Consolidated Financial Statements in our 2013 Annual Report). Other rent escalation clauses can take effect based on changes in primary mall tenants throughout the term of a given lease. Many leases also contain cancellation or kick-out clauses in our favor that relieve us of any future obligation under a lease if specified criteria are met. These cancellation provisions typically apply if annual store sales levels do not exceed $1 million or mall occupancy targets are not achieved within the first 36 months of the lease. Generally, we are not required to make payments to our landlords in order to exercise our cancellation rights under these provisions. The Wells Credit Facility and Term Loan do not preclude the transfer or disposal of assets related to the stores we are projecting to close by the end of fiscal 2014. None of our retail store leases contain purchase options.

Indemnifications

In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by us, or intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with our directors and certain of our officers that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. We maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors and officers in certain circumstances.

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It is not possible to determine our maximum potential liability under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Such indemnification agreements may not be subject to maximum loss clauses. Historically, we have not incurred material costs as a result of obligations under these agreements.

Off-Balance Sheet Arrangements

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative instruments, or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk, or credit risk support to us.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements is contained in Note 3 to the Condensed Consolidated Financial Statements and is incorporated herein by reference.

Inflation

We do not believe that inflation has had a material effect on our results of operations in the recent past, including the first three quarters of fiscal 2014.

Seasonality and Quarterly Results

Our business is seasonal by nature. Our first quarter historically accounts for the smallest percentage of annual net sales with each successive quarter contributing a greater percentage than the last. In recent years, approximately 45% of our net sales have occurred in the first half of the fiscal year and 55% have occurred in the second half. The six to seven week selling periods for each of the back-to-school and holiday seasons together account for approximately 35% to 40% of our annual net sales and a higher percentage of our operating results on a combined basis. Our quarterly results of operations may also fluctuate significantly as a result of a variety of factors, including changes in consumer buying patterns, fashion trends, the timing and level of markdowns, the timing of store closings, expansions and relocations, competitive factors, and general economic conditions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to interest rate risk in connection with the Wells Credit Facility. Generally, direct borrowings under the Wells Credit Facility bear interest at a floating rate (as defined in the Wells Credit Facility, 1.91% as of November 1, 2014) which, at the Company’s option, may be determined by reference to a LIBOR Rate or a Base Rate). See Note 7 to the Consolidated Financial Statements in our 2013 Annual Report.

A sensitivity analysis was performed with respect to the Wells Credit Facility to determine the impact of unfavorable changes in interest rates on our cash flows. The sensitivity analysis quantified that the estimated potential cash flow impact would be less than $10,000 in additional interest expense (for each $1 million borrowed) if interest rates were to increase by 10% from their current rates over a three-month period. Actual interest charges incurred may differ from those estimated because of changes or differences in market rates, differences in amounts borrowed, timing and other factors.

We are exposed to market risks related to fluctuations in the market price of our common stock. The derivative liability associated with the Series B Preferred is recorded at fair value using an options pricing model which is dependent on the market price of our common stock. Changes in the value of the derivative are included as a component of earnings in current operations. A sensitivity analysis was performed with respect to the Series B Preferred to determine the impact of fluctuations in the market price of our common stock. The sensitivity analysis determined that the impact of a market price fluctuation of 10% would change the fair value of the derivative liability by approximately $2 million. See Note 10 to the Condensed Consolidated Financial Statements for further discussion of our derivative liability and valuation thereof.

ITEM 4. CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. These disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Our disclosure controls and procedures are also designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures. Based on

22

this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of November 1, 2014.

No change in our internal control over financial reporting occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information on legal proceedings see “Litigation” within Note 11 to the Condensed Consolidated Financial Statements, which information is incorporated herein by reference.

ITEM 1A. RISK FACTORS

We have included in Part I, Item 1A of our 2013 Annual Report descriptions of certain risks and uncertainties that could affect our business, future performance or financial condition (the “Risk Factors”). We believe there are no material changes from the disclosure provided in our 2013 Annual Report with respect to the Risk Factors, other than those disclosed in our Quarterly Report on Form 10-Q for the quarter ended August 2, 2014. Investors should consider the Risk Factors prior to making an investment decision with respect to the Company’s stock.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

23

ITEM 6. EXHIBITS

		Incorporated by Reference
Exhibit #	Exhibit Description	Form	Filing Date
3.1	Third Amended and Restated Articles of Incorporation of the Company	10-Q	8/31/2004
3.2	Certificate of Determination of Preferences of Series A Junior Participating Preferred Stock of the Company	8-K	12/24/1998
3.3	Sixth Amended and Restated Bylaws of the Company	10-Q	9/6/2013
3.4	Certificate of Determination of Preferences of Convertible Series B Preferred Stock of the Company.	8-K	12/7/2011
10.1	Modification Agreement, dated as of July 1, 2014, between Miraloma and American National Insurance Company	8-K	7/7/2014
10.2	Modification of Note, Mortgage and Other Agreements, dated as of July 1, 2014, between PacSun Stores and American National Insurance Company	8-K	7/7/2014
31.1+	Certification of Gary H. Schoenfeld pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2+	Certification of Michael W. Kaplan pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.1+	Certifications of Gary H. Schoenfeld and Michael W. Kaplan pursuant to section 906 of the Sarbanes-Oxley Act of 2002
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

+ Filed herewith

** These interactive files are deemed not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and are otherwise not subject to liability under these sections.

24

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

	PACIFIC SUNWEAR OF CALIFORNIA, INC. (Registrant)
Date: December 4, 2014	By:	/s/ GARY H. SCHOENFELD
		Gary H. Schoenfeld
		President, Chief Executive Officer and Director
		(Principal Executive Officer)
Date: December 4, 2014	By:	/s/ MICHAEL W. KAPLAN
		Michael W. Kaplan
		Sr. Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

25

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Gary H. Schoenfeld, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pacific Sunwear of California, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 4, 2014	/s/ GARY H. SCHOENFELD
	Gary H. Schoenfeld
	President, Chief Executive Officer and Director

EXHIBIT 31.2

CERTIFICATIONS

I, Michael W. Kaplan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pacific Sunwear of California, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 4, 2014	/s/ MICHAEL W. KAPLAN
	Michael W. Kaplan
	Sr. Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Pacific Sunwear of California, Inc. (the “Company”) on Form 10-Q for the quarter ended November 1, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Gary H. Schoenfeld, the Chief Executive Officer of the Company, and Michael W. Kaplan, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i) the Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: December 4, 2014	/s/ GARY H. SCHOENFELD
	Gary H. Schoenfeld
	President, Chief Executive Officer and Director Pacific Sunwear of California, Inc.
	(Principal Executive Officer)
Dated: December 4, 2014	/s/ MICHAEL W. KAPLAN
	Michael W. Kaplan
	Sr. Vice President and Chief Financial Officer Pacific Sunwear of California, Inc.
	(Principal Financial and Accounting Officer)

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

XML

Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Nov. 01, 2014
Income Tax Disclosure [Abstract]
Net state deferred tax assets	$ 4
Acquisition and disposition ownership interest period	3 years

XML

Fair Value Measurements - Summary of Activity Recorded for Derivatives Using Level 3 Inputs (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended						9 Months Ended
	Nov. 01, 2014	Aug. 02, 2014	May 03, 2014	Nov. 02, 2013	Aug. 03, 2013	May 04, 2013	Nov. 01, 2014	Nov. 02, 2013
Derivative Liability [Roll Forward]
Beginning balance as of beginning of period	$ 19,061	$ 29,495	$ 30,720	$ 50,526	$ 29,372	$ 20,082	$ 30,720	$ 20,082
Loss (Gain) on change in fair value	(4,881)	(10,434)	(1,225)	(23,444)	21,154	9,290	(16,540)	7,000
Ending balance as of end of period	$ 14,180	$ 19,061	$ 29,495	$ 27,082	$ 50,526	$ 29,372	$ 14,180	$ 27,082

XML

Shareholders' Equity - Employee Stock Purchase Plan - Additional Information (Detail)	0 Months Ended		9 Months Ended
	Jul. 02, 2013	Jun. 30, 2013	Nov. 01, 2014	Nov. 02, 2013	Mar. 20, 2014	Mar. 19, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period			0	10,375
Employee Stock Purchase Plan (“ESPP”) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of discount in purchasing common stock from fair market value under ESPP				10.00%
Purchasing period of stock under ESPP	1 year	6 months
Period of service for eligibility in the ESPP				3 months
Number of authorized shares					2,500,000	2,100,000
Share issued under ESPP			174,335	149,398

XML

Derivative Liability (Details) (USD $)					9 Months Ended
	Nov. 01, 2014	Feb. 01, 2014	Nov. 01, 2014 Series B Preferred Stock [Member]	Dec. 07, 2011 Series B Preferred Stock [Member]	Nov. 01, 2014 Five-Year Senior Secured Term Loan [Member] Senior Secured Term Loan [Member]
Derivative [Line Items]
Preferred stock, shares issued			1,000
Term loan maturity period					5 years
Debt Instrument, Face Amount					$ 60,000,000
Fair value of Series B Preferred Stock				15,000,000
Derivative liability	$ 14,180,000	$ 30,720,000

XML

Fair Value Measurements (Tables)

9 Months Ended

Nov. 01, 2014

Fair Value Disclosures [Abstract]

Summary of Fair Value Assumptions for Derivative Liabilities

The fair value of the Series B Preferred shares was estimated using an option-pricing model that requires Level 3 inputs, which are highly subjective and determined using the following significant assumptions as of:

	November 1, 2014	November 2, 2013
Stock price	$1.52	$2.59
Conversion price	$1.75	$1.75
Expected volatility	76%	72%
Expected term (in years)	7.1	8.1
Risk free interest rate	2.05%	2.34%
Expected dividends	$—	$—

Summary of Activity Recorded for Derivatives Using Level 3 Inputs

The following table presents the activity recorded for the derivative liability during the first three quarters ended:

	November 1, 2014			November 2, 2013
	(In thousands)
Beginning balance	$	30,720		$	20,082
(Gain) loss on change in fair value	(1,225		)	9,290
Balance at end of first quarter	29,495			29,372
(Gain) loss on change in fair value	(10,434		)	21,154
Balance at end of second quarter	19,061			50,526
(Gain) loss on change in fair value	(4,881		)	(23,444		)
Ending balance	$	14,180		$	27,082

XML

Commitments and Contingencies - Additional Information (Detail) (Guarantee obligations [Member], USD $) In Millions, unless otherwise specified	Nov. 01, 2014	Feb. 01, 2014
Guarantee obligations [Member]
Loss Contingencies [Line Items]
Guarantees in the form of commercial letters of credit	$ 9	$ 10

XML

Shareholders' Equity - Stock Option (Incentive and Nonqualified) Activity (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Nov. 01, 2014	Nov. 02, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at Feb 1, 2014, Shares	2,209,379
Granted, shares	0
Exercised, shares	0	(10,375)
Forfeited or expired shares	(280,214)
Outstanding at November 1, 2014	1,929,165
Vested and expected to vest at November 1, 2014	1,926,855
Exercisable at November 1, 2014	1,894,254
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Weighted-Average Exercise Price, Outstanding at February 1, 2014 (in dollars per share)	$ 5.11
Granted, Weighted-Average Exercise Price (in dollars per share)	$ 0.00
Exercised, Weighted-Average Exercise Price (in dollars per share)	$ 0.00
Forfeited or expired, Weighted-Average Exercise Price (in dollars per share)	$ 11.64
Weighted-Average Exercise Price Outstanding at November 1, 2014 (in dollars per share)	$ 4.16
Vested and expected to vest at November 1, 2014, Weighted-Average Exercise Price (in dollars per share)	$ 4.17
Exercisable at November 1, 2014, Weighted-Average Exercise Price (in dollars per share)	$ 4.19
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Outstanding at November 1, 2014, Weighted-Average Remaining Contractual Term	2 years
Vested and expected to vest at November 1, 2014, Weighted-Average Remaining Contractual Term	2 years
Exercisable at November 1, 2014, Weighted-Average Remaining Contractual Term	2 years
Outstanding at November 1, 2014, Aggregate Intrinsic Value	$ 5
Vested and expected to vest at November 1, 2014, Aggregate Intrinsic Value	5
Exercisable at May 3, 2014, Aggregate Intrinsic Value	$ 4

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Debt - Mortgage Debt - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended			0 Months Ended		0 Months Ended
	Nov. 01, 2014 Note	Nov. 02, 2013	Nov. 01, 2014 Note	Nov. 02, 2013	Aug. 20, 2010 Notes payable [Member]	Jul. 01, 2014 Notes payable [Member] Miraloma [Member]	Jul. 01, 2014 Notes payable [Member] Miraloma [Member]	Jul. 01, 2014 Notes payable [Member] PacSun Stores Note [Member]	Jul. 01, 2014 Notes payable [Member] PacSun Stores Note [Member]
Line of Credit Facility [Line Items]
Number of promissory note	2		2
Maximum borrowing capacity					$ 29,800,000
Notes payable amortization schedule period			25 years
Proceeds from mortgage borrowings			618,000	0		300,000		200,000
Notes payable outstanding principal and unpaid interest							15,900,000		12,300,000
Interest rate							5.25%		5.25%
Interest expense, net	$ 3,867,000	$ 3,565,000	$ 11,819,000	$ 10,551,000

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Discontinued Operations - Additional Information (Detail)	3 Months Ended		9 Months Ended
	Nov. 01, 2014 Store	Nov. 02, 2013 Store	Nov. 01, 2014 Store	Nov. 02, 2013 Store
Discontinued Operations and Disposal Groups [Abstract]
Number of underperforming stores which were closed	1	3	3	13

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Fair Value Measurements - Summary of Fair Value Assumptions for Derivative Liabilities (Detail) (USD $)	3 Months Ended
	Nov. 01, 2014	Nov. 02, 2013
Fair Value Disclosures [Abstract]
Share Price	$ 1.52	$ 2.59
Conversion price	$ 1.75	$ 1.75
Expected volatility	76.00%	72.00%
Expected term (in years)		8 years 1 month
Risk free interest rate	2.05%	2.34%
Expected dividends

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Impairment of Long-Lived Assets

9 Months Ended

Nov. 01, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Impairment of Long-Lived Assets

IMPAIRMENT OF LONG-LIVED ASSETS

The Company assesses long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets (or asset group) may not be recoverable. Based on management’s review of the historical operating performance, including sales trends, gross margin rates, current cash flows from operations and the projected outlook for each of the Company’s stores, the Company determined that certain stores would not be able to generate sufficient cash flows over the remaining term of the related leases to recover the Company’s investment in the respective stores. As a result, the Company recorded the following non-cash impairment charges related to its retail stores within the accompanying Condensed Consolidated Statements of Operations and Comprehensive Operations, to write-down the carrying value of its long-lived store assets to their estimated fair values.

	For the Third Quarter Ended				For the Three Quarters Ended
	(In thousands)
	November 1, 2014		November 2, 2013		November 1, 2014		November 2, 2013
Impairment charges from continuing operations	$	377	$	600	$	2,040	$	2,031

	November 1, 2014		November 2, 2013
	(In thousands)
Carrying value of assets tested for impairment	$	1,466	$	3,803
Carrying value of assets with impairment	$	558	$	822
Fair value of assets impaired	$	181	$	222
Number of stores tested for impairment	48		57
Number of stores with impairment	12		8

The long-lived assets disclosed above that were written down to their respective fair values consisted primarily of leasehold improvements, furniture, fixtures and equipment. The Company recognized impairment charges of $0.4 million and $0.6 million, respectively, during the third quarters ended November 1, 2014 and November 2, 2013 and $2.0 million during each of the first three quarters of fiscal 2014 and 2013, respectively. The decrease in the number of stores tested for impairment year-over-year was primarily related to the Company’s closure of certain under-performing stores and the improved financial performance of the remaining store base. Based on historical operating performance and the projected outlook for a subset of the stores tested for impairment as of November 1, 2014, the Company believes that the remaining asset value of approximately $0.2 million is recoverable. In addition, during the third quarter of 2014, the Company determined that certain software previously capitalized for internal use was abandoned. As a result, the Company recorded an impairment charge of $1.1 million and accrued approximately $0.4 million related to future software maintenance costs.

See Note 10, "Fair Value Measurements" for further discussion related to impairment of long-lived assets.

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Shareholders' Equity - Stock Options - Additional Information (Detail)	9 Months Ended
	Nov. 01, 2014	Nov. 02, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Shares exercised	0	10,375

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Summary of Significant Accounting Policies - Reconciliation of Denominator of Each Net Income (Loss) per Share Calculation (Details)	3 Months Ended		9 Months Ended
	Nov. 01, 2014	Nov. 02, 2013	Nov. 01, 2014	Nov. 02, 2013
Accounting Policies [Abstract]
Shares used in computing basic net (loss) income per share	69,235,168	68,567,973	69,018,319	68,424,615
Dilutive effect of options, restricted stock and convertible preferred stock	0	6,947,147	0	0
Shares used in computing diluted net (loss) income per share	69,235,168	75,515,120	69,018,319	68,424,615

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Summary of Significant Accounting Policies - Antidilutive Shares (Details) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended
	Nov. 01, 2014	Nov. 01, 2014	Nov. 02, 2013
Accounting Policies [Abstract]
Antidilutive securities excluded from computation of EPS (in shares)	1.3	4.2	6.6

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Shareholders' Equity - Restricted Stock Awards and Restricted Stock Units - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
	Nov. 01, 2014	Nov. 02, 2013	Nov. 01, 2014	Nov. 02, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense			$ 1,202,000	$ 2,200,000
Compensation cost related to nonvested stock options, restricted stock awards and restricted stock units not yet recognized	1,600,000		1,600,000
Stock based compensation expense, weighted average period	1 year 8 months
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-Average Grant-Date Fair Value, Granted (in dollars per share)			$ 2.51	$ 2.53
Fair value of awards vested			1,200,000	1,500,000
Granted, Shares			100,000
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-Average Grant-Date Fair Value, Granted (in dollars per share)			$ 2.25	$ 3.47
Fair value of awards vested			300,000	400,000
Granted, Shares			150,000
Performance Plan [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period of restricted stock			4 years
Restricted stock award vesting percentage per year			25.00%
Performance Plan [Member] | Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock award vesting percentage per year			100.00%
Stock-based compensation expense	$ 400,000	$ 500,000	$ 1,200,000	$ 2,200,000
Performance -based restricted stock awards [Member] | Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-Average Grant-Date Fair Value, Granted (in dollars per share)				$ 1.77
Granted, Shares				675,000

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Impairment of Long-Lived Assets - Long-Lived Assets Tested for Impairment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Nov. 01, 2014	Nov. 02, 2013	Nov. 01, 2014	Nov. 02, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
Impairment charges from continuing operations	$ 377	$ 600	$ 2,040	$ 2,031

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Impairment of Long-Lived Assets - Details of Long-Lived Assets Tested and Impaired (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Nov. 01, 2014 Store	Nov. 02, 2013 Store
Goodwill and Intangible Assets Disclosure [Abstract]
Long Lived Assets Impairment Charges	$ 3,119	$ 2,031
Carrying value of assets tested for impairment	1,466	3,803
Carrying value of assets with impairment	558	822
Fair value of assets impaired	$ 181	$ 222
Number of stores tested for impairment	48	57
Number of stores with impairment	12	8

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Summary of Significant Accounting Policies

9 Months Ended

Nov. 01, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Information regarding significant accounting policies is contained in Note 1, “Nature of Business and Summary of Significant Accounting Policies,” of the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for fiscal 2013. Presented below in the following notes is supplemental information that should be read in conjunction with “Notes to Consolidated Financial Statements” included in that Report.

Income Taxes

The Company calculates its interim income tax provision in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 270, “Interim Reporting” (“ASC 270”) and ASC Topic 740, “Accounting for Income Taxes” (“ASC 740”). At the end of each interim period, the Company estimates the annual effective tax rate and applies that rate to its ordinary quarterly earnings. The tax expense or benefit related to significant, unusual, or extraordinary items is recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws, rates or tax status is recognized in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including the expected operating income for the year, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets generated in the current fiscal year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or the tax environment changes.

Earnings Per Share

Basic earnings per share is computed using the weighted-average number of common shares outstanding. Diluted earnings per share is computed using the weighted-average number of common shares outstanding adjusted for the incremental shares attributed to outstanding options to purchase common stock and nonvested restricted stock using the treasury stock method, if dilutive. In periods where a net loss is reported, incremental shares are excluded as their effect would be anti-dilutive. In such circumstances, the weighted-average number of shares outstanding in the basic and diluted earnings per common share calculations will be the same. Anti-dilutive options and nonvested shares are excluded from the computation of diluted earnings per share because either the option exercise price or the grant date fair value of the nonvested share is greater than the market price of the Company’s common stock. Options to purchase 1.3 million shares of common stock in the third quarter of fiscal 2014, and 4.2 million and 6.6 million shares of common stock in the first three quarters of fiscal 2014 and 2013, respectively, were excluded from the computation of diluted earnings per share as their effect would have been anti-dilutive.

The table below sets forth the reconciliation of the denominator of each net (loss) income per share calculation for the third quarter and first three quarters of fiscal years 2014 and 2013:

	For the Third Quarter Ended		For the Three Quarters Ended
	(in thousands)
	November 1, 2014	November 2, 2013	November 1, 2014	November 2, 2013
Shares used in computing basic net (loss) income per share	69,235	68,568	69,018	68,425
Dilutive effect of options, restricted stock and convertible preferred stock	—	6,947	—	—
Shares used in computing diluted net (loss) income per share	69,235	75,515	69,018	68,425

Recent Accounting Pronouncements

In August 2014 the FASB issued Accounting Standards Update ("ASU") No. 2014-15, "Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern" ("ASU 2014-15"). This ASU sets forth guidance regarding management’s responsibility to (1) evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern, and (2) provide related footnote disclosures. ASU 2014-15 requires management to assess the Company’s ability to continue as a going concern by incorporating and expanding upon certain principles that currently exist in U.S. auditing standards. Specifically, this update provided a definition of the term “substantial doubt,” and added new Subtopic 205-40, Presentation of Financial Statements-Going Concern, which (1) requires an evaluation every reporting period, including interim periods, (2) sets forth principles for considering the mitigating effect of management’s plans, (3) mandates certain disclosures when substantial doubt is alleviated as a result of the consideration of management’s plans, (4) mandates an express statement, and other disclosures, when substantial doubt is not alleviated, and (5) requires an assessment for a period of one year after the date that the financial statements are issued, or are available to be issued. The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption of this ASU is permitted. The Company does not expect the adoption of ASU 2014-15 to have a material impact on its financial position or results of operations.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue From Contracts with Customers" ("ASU 2014-09"). The ASU amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The new standard is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled to when products are transferred to customers. The Company is required to adopt ASU 2014-09 for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. The new revenue accounting standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. Based on the Company's evaluation of the ASU, its adoption of this update is not expected to have a material impact on the Company's financial position or results of operations.

In April 2014, the FASB issued ASU No. 2014-08, "Presentation of Financial Statements and Property, Plant, and Equipment" and "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" ("ASU 2014-08"). The ASU amendment changes the requirements for reporting discontinued operations in Subtopic 205-20. The amendment is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2014. Early adoption is permitted. The Company has adopted ASU 2014-08 as of the beginning of its fourth fiscal quarter of 2014. Based on the Company's evaluation of the ASU, the adoption of this ASU is not expected to have a material impact on the Company's financial position or results of operations.

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Impairment of Long-Lived Assets - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
	Nov. 01, 2014	Nov. 02, 2013	Nov. 01, 2014	Nov. 02, 2013
Goodwill and Intangible Assets Disclosure [Abstract]
Impairment charges from continuing operations	$ 377,000	$ 600,000	$ 2,040,000	$ 2,031,000
Fair value of assets impaired			181,000	222,000
Impairment of software	1,100,000		1,100,000
Accrued software maintenance costs	$ 400,000		$ 400,000

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Shareholders' Equity - Preferred Stock - Additional Information (Detail) (Series B Preferred Stock [Member], USD $)	9 Months Ended
	Nov. 02, 2013	Feb. 02, 2013
Series B Preferred Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Right to purchase common stock	13,500,000.0
Exercise price		$ 1.75

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Discontinued Operations - Details of Operating Results Included in Discontinued Operations (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Nov. 02, 2013	Nov. 02, 2013
Discontinued Operations and Disposal Groups [Abstract]
Net sales	$ 3,783	$ 12,460
Cost of goods sold, including buying, distribution and occupancy costs	3,210	9,880
Gross margin	573	2,580
Selling, general and administrative expenses	1,019	3,778
Operating loss	(446)	(1,198)
Income tax expense	27	43
Loss from discontinued operations	$ (473)	$ (1,241)

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Nov. 01, 2014	Feb. 01, 2014
CURRENT ASSETS:
Cash and cash equivalents	$ 12,279	$ 27,769
Inventories	129,157	83,073
Prepaid expenses	15,872	13,404
Other current assets	6,072	6,089
Total current assets	163,380	130,335
Property and equipment, net	91,485	96,797
Deferred income taxes	6,175	6,175
Intangible Assets, Net (Excluding Goodwill)	10,642	12,968
Other assets	25,877	26,364
TOTAL ASSETS	297,559	272,639
CURRENT LIABILITIES:
Accounts payable	81,637	46,034
Derivative liability	14,180	30,720
Other current liabilities	44,783	37,286
Total current liabilities	140,600	114,040
LONG-TERM LIABILITIES:
Deferred lease incentives	11,590	12,889
Deferred rent	14,927	15,440
Long-term debt	88,474	86,075
Other liabilities	25,808	26,046
Total long-term liabilities	140,799	140,450
Commitments and contingencies (Note 11)
SHAREHOLDERS’ EQUITY:
Preferred stock, $0.01 par value; 5,000,000 shares authorized; 1,000 shares issued and outstanding	0	0
Common stock, $0.01 par value; 170,859,375 shares authorized; 69,242,483 and 68,591,818 shares issued and outstanding, respectively	692	686
Additional paid-in capital	23,972	22,602
Accumulated deficit	(8,504)	(5,139)
Total shareholders’ equity	16,160	18,149
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$ 297,559	$ 272,639

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Shareholders' Equity - Summary of Service-Based Restricted Stock Awards and Units Activity (Detail) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended
	Nov. 01, 2014	Nov. 02, 2013
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Shares Outstanding at February 1, 2014	122,480
Granted, Shares	150,000
Vested, Shares	(122,480)
Forfeited or expired, Shares
Outstanding at November 1, 2014	150,000
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Weighted-Average Grant-Date Fair Value, Outstanding at February 1, 2014 (in dollars per share)	$ 3.47
Weighted-Average Grant-Date Fair Value, Granted (in dollars per share)	$ 2.25	$ 3.47
Weighted-Average Grant-Date Fair Value Vested (in dollars per share)	$ 3.47
Weighted-Average Grant-Date Fair Value, Forfeited (in dollars per share)
Weighted-Average Grant-Date Fair Value, Outstanding at August 2, 2014 (in dollars per share)	$ 2.25
Fair value of awards vested	$ 0.3	$ 0.4
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Shares Outstanding at February 1, 2014	1,319,571
Granted, Shares	100,000
Vested, Shares	(422,230)
Forfeited or expired, Shares	(139,483)
Outstanding at November 1, 2014	857,858
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Weighted-Average Grant-Date Fair Value, Outstanding at February 1, 2014 (in dollars per share)	$ 2.13
Weighted-Average Grant-Date Fair Value, Granted (in dollars per share)	$ 2.51	$ 2.53
Weighted-Average Grant-Date Fair Value Vested (in dollars per share)	$ 2.31
Weighted-Average Grant-Date Fair Value, Forfeited (in dollars per share)	$ 2.30
Weighted-Average Grant-Date Fair Value, Outstanding at August 2, 2014 (in dollars per share)	$ 2.06
Fair value of awards vested	$ 1.2	$ 1.5

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Nature of Business

9 Months Ended

Nov. 01, 2014

Accounting Policies [Abstract]

Nature of Business

NATURE OF BUSINESS

Pacific Sunwear of California, Inc. (together with its wholly-owned subsidiaries, the “Company” or “PacSun”) is a leading specialty retailer rooted in the action sports, fashion and music influences of the California lifestyle. The Company sells a combination of branded and proprietary casual apparel, accessories and footwear designed to appeal to teens and young adults. It operates a nationwide, primarily mall-based chain of retail stores under the names “Pacific Sunwear” and “PacSun.” In addition, the Company operates an e-commerce website at www.pacsun.com which sells PacSun merchandise online, provides content and community for its target customers and provides information about the Company. The Company, a California corporation, was incorporated in August 1982. As of November 1, 2014, the Company leased and operated 620 stores in each of the 50 states and Puerto Rico.

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Debt - Credit Facility - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended				0 Months Ended			0 Months Ended
	Nov. 01, 2014	Nov. 02, 2013	Nov. 01, 2014	Nov. 02, 2013	Nov. 01, 2014 Guarantee obligations [Member]	Feb. 01, 2014 Guarantee obligations [Member]	Nov. 02, 2013 Wells Credit Facility [Member] Wells Fargo Bank NA [Member]	Nov. 01, 2014 Wells Credit Facility [Member] Wells Fargo Bank NA [Member]	Dec. 07, 2011 Wells Credit Facility [Member] Wells Fargo Bank NA [Member]	Dec. 07, 2011 Wells Credit Facility [Member] Line of Credit [Member] Five-Year Revolving Credit Facility [Member]	Nov. 01, 2014 Swing-line loans [Member] Wells Fargo Bank NA [Member]
Line of Credit Facility [Line Items]
Interest Income (Expense), Net	$ (3,867,000)	$ (3,565,000)	$ (11,819,000)	$ (10,551,000)
Term loan maturity period										5 years
Maximum borrowing capacity									100,000,000		12,500,000
Revolving credit facility reference to floating interest rate							1.91%
Direct borrowings								0
Letters of credit outstanding					9,000,000	10,000,000
Availability under Wells Fargo Facility								49,000,000
Notes payable to bank	$ 15,000,000		$ 15,000,000

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Other Current Liabilities (Tables)

9 Months Ended

Nov. 01, 2014

Other Liabilities Disclosure [Abstract]

Schedule of Other Current Liabilities

Other current liabilities consisted of the following:

	November 1, 2014		February 1, 2014
	(In thousands)
Accrued compensation and benefits	$	10,995	$	7,858
Accrued gift cards	6,066		9,036
Sales taxes payable	2,187		1,549
Other	25,535		18,843
Total other current liabilities	$	44,783	$	37,286

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Debt - Term Loan - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Dec. 07, 2011 Cash and Cash Equivalents [Member] Five Year Term Loan [Member] Five-Year Senior Secured Term Loan [Member]	Nov. 01, 2014 Cash [Member] Term Loan [Member]	Dec. 07, 2011 Payment in kind [Member] Term Loan [Member]
Term Loan [Line Items]
Interest rate	5.50%		7.50%
Accrued interest		$ 4.0

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Shareholders' Equity (Tables)

9 Months Ended

Nov. 01, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Option (Incentive and Nonqualified) Activity

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Yrs.)	Aggregate Intrinsic Value ($000s)
Outstanding at February 1, 2014	2,209,379		$	5.11
Granted	—		—
Exercised	—		—
Forfeited or expired	(280,214	)	11.64
Outstanding at November 1, 2014	1,929,165		$	4.16	2.0	$	5
Vested and expected to vest at November 1, 2014	1,926,855		$	4.17	2.0	$	5
Exercisable at November 1, 2014	1,894,254		$	4.19	2.0	$	4

Summary of Service-Based Restricted Stock Awards and Units Activity

	Shares		Weighted- Average Grant-Date Fair Value
Outstanding at February 1, 2014	1,319,571		$	2.13
Granted	100,000		2.51
Vested	(422,230	)	2.31
Forfeited	(139,483	)	2.30
Outstanding at November 1, 2014	857,858		$	2.06

	Shares		Weighted- Average Grant-Date Fair Value
Outstanding at February 1, 2014	122,480		$	3.47
Granted	150,000		2.25
Vested	(122,480	)	3.47
Forfeited	—		—
Outstanding at November 1, 2014	150,000		$	2.25

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Basis of Presentation

9 Months Ended

Nov. 01, 2014

Accounting Policies [Abstract]

Basis of Presentation

BASIS OF PRESENTATION

The accompanying Condensed Consolidated Financial Statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted.

These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2014 (“fiscal 2013”) filed with the SEC. The Condensed Consolidated Financial Statements include the accounts of Pacific Sunwear of California, Inc. and its wholly-owned subsidiaries (Pacific Sunwear Stores Corp., a California corporation (“PacSun Stores”) and Miraloma Borrower Corporation, a Delaware corporation (“Miraloma”)). All intercompany transactions have been eliminated in consolidation.

In the opinion of management, all adjustments consisting only of normal recurring entries necessary for a fair presentation have been included. The preparation of Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements as well as the reported revenues and expenses during the reporting period. Actual results could differ from these estimates. The results of operations for the Company’s fiscal quarter ended and first three quarters ended November 1, 2014 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2015 (“fiscal 2014”).

The results of continuing operations for all periods presented in these Condensed Consolidated Financial Statements exclude the financial impact of discontinued operations. See Note 13, “Discontinued Operations” for further discussion related to discontinued operations presentation.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Nov. 01, 2014	Feb. 02, 2013
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	1,000	1,000
Preferred stock, shares outstanding	1,000	1,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	170,859,375	170,859,375
Common stock, shares issued	69,242,483	68,591,818
Common stock, shares outstanding	69,242,483	68,591,818

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Segment Reporting

9 Months Ended

Nov. 01, 2014

Segment Reporting [Abstract]

Segment Reporting

SEGMENT REPORTING

The Company operates exclusively in the retail apparel industry. The Company designs, produces and distributes clothing and related products catering to teens and young adults primarily through its mall-based PacSun retail stores. The Company has identified three operating segments: PacSun stores, PacSun Outlet stores and pacsun.com. The three operating segments have been aggregated into one reportable segment based on the similar nature of products sold, production, merchandising and distribution processes involved, target customers, and economic characteristics among the three operating segments.

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Document and Entity Information	9 Months Ended
	Nov. 01, 2014	Dec. 03, 2014
Document Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Nov. 01, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Trading Symbol	PSUN
Entity Registrant Name	PACIFIC SUNWEAR OF CALIFORNIA INC
Entity Central Index Key	0000874841
Current Fiscal Year End Date	--01-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		69,264,214

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Discontinued Operations

9 Months Ended

Nov. 01, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

In accordance with ASC Topic 205, “Presentation of Financial Statements-Discontinued Operations”, the Company has presented the results of operations of its closed stores as discontinued operations for all periods presented. The Company closed one and three under-performing stores in the third quarters of fiscal 2014 and 2013, respectively, and three and thirteen under-performing stores in the first three quarters of fiscal 2014 and 2013, respectively. If the cash flow of the closed store was determined not to be significant to ongoing operations, and the cash inflows of nearby stores were not expected to increase significantly, the results of operations of the closed store are included in discontinued operations. The following table details the operating results included in discontinued operations for the periods presented:

	For the Third Quarter Ended			For the Three Quarters Ended
	(In thousands)
	November 2, 2013			November 2, 2013
Net sales	$	3,783		$	12,460
Cost of goods sold, including buying, distribution and occupancy costs	3,210			9,880
Gross margin	573			2,580
Selling, general and administrative expenses	1,019			3,778
Operating loss	(446		)	(1,198		)
Income tax expense	27			43
Loss from discontinued operations	$	(473	)	$	(1,241	)

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE OPERATIONS (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Nov. 01, 2014	Nov. 02, 2013	Nov. 01, 2014	Nov. 02, 2013
Income Statement [Abstract]
Net sales	$ 212,292	$ 202,795	$ 595,184	$ 579,201
Cost of goods sold, including buying, distribution and occupancy costs	155,609	151,622	432,299	423,661
Gross margin	56,683	51,173	162,885	155,540
Selling, general and administrative expenses	58,020	52,968	170,609	162,418
Operating loss	(1,337)	(1,795)	(7,724)	(6,878)
(Gain) loss on derivative liability	(4,881)	(23,444)	(16,540)	7,000
Interest expense, net	3,867	3,565	11,819	10,551
(Loss) income from continuing operations before income taxes	(323)	18,084	(3,003)	(24,429)
Income tax expense	146	369	362	514
(Loss) income from continuing operations	(469)	17,715	(3,365)	(24,943)
Loss from discontinued operations, net of tax effects	0	(473)	0	(1,241)
Net (loss) income	(469)	17,242	(3,365)	(26,184)
Comprehensive (loss) income	$ (469)	$ 17,242	$ (3,365)	$ (26,184)
(Loss) income from continuing operations per share:
Income (Loss) from Continuing Operations, Per Basic Share	$ (0.01)	$ 0.26	$ (0.05)	$ (0.36)
Income (Loss) from Continuing Operations, Per Diluted Share	$ (0.01)	$ 0.24	$ (0.05)	$ (0.36)
Loss from discontinued operations per share:
Income (Loss) from Discontinued Operations and Disposal of Discontinued Operations, Net of Tax, Per Basic Share	$ 0.00	$ (0.01)	$ 0.00	$ (0.02)
Income (Loss) from Discontinued Operations and Disposal of Discontinued Operations, Net of Tax, Per Diluted Share	$ 0.00	$ (0.01)	$ 0.00	$ (0.02)
Net (loss) income per share:
Earnings Per Share, Basic	$ (0.01)	$ 0.25	$ (0.05)	$ (0.38)
Earnings Per Share, Diluted	$ (0.01)	$ 0.23	$ (0.05)	$ (0.38)
Weighted-average shares outstanding:
Shares used in computing basic net (loss) income per share	69,235,168	68,567,973	69,018,319	68,424,615
Weighted Average Number of Shares Outstanding, Diluted	69,235,168	75,515,120	69,018,319	68,424,615

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Debt

9 Months Ended

Nov. 01, 2014

Debt Disclosure [Abstract]

Debt

DEBT

Credit Facility

On December 7, 2011, the Company entered into a new five-year, $100 million revolving credit facility with Wells Fargo Bank, N.A (the “Wells Credit Facility”), which replaced the Company’s previous revolving credit facility with JPMorgan Chase (the “Former Credit Facility”). Borrowings under the Wells Credit Facility bear interest at a floating rate (as defined in the Wells Credit Facility, 1.91% as of November 1, 2014) which, at the Company’s option, may be determined by reference to a LIBOR Rate or a Base Rate. Extensions of credit under the Wells Credit Facility are limited to a borrowing base consisting of specified percentages of eligible categories of assets. The Wells Credit Facility is available for direct borrowings and allows for the issuance of letters of credit, and up to $12.5 million is available for swing-line loans. The Wells Credit Facility is secured by liens and security interests with (a) a first priority security interest in the current and certain related assets of the Company including cash, cash equivalents, deposit accounts, securities accounts, credit card receivables and inventory, and (b) a second priority security interest in all assets and properties of the Company that are not secured by a first lien and security interest. The Wells Credit Facility also contains covenants that, subject to specified exceptions, restrict the Company’s ability to, among other things, incur additional indebtedness, incur liens, liquidate or dissolve, sell, transfer, lease or dispose of assets, or make loans, investments or guarantees. The Wells Credit Facility is scheduled to mature on December 7, 2016. At November 1, 2014, the Company had no direct borrowings and $9 million in letters of credit outstanding under the Wells Credit Facility. The remaining availability under the Wells Credit Facility at November 1, 2014 was approximately $49 million.

Consistent with its previous expectations, in the fourth quarter of fiscal 2014 the Company borrowed $15 million on the Wells Fargo Credit Facility to finance inventory purchases for the holiday season. The Company expects to repay such borrowings prior to the end of the fourth quarter of fiscal 2014. The Company is not subject to any financial covenant restrictions under the Wells Credit Facility. Based on current forecasts, the Company believes that its cash flows from operations and working capital, along with the availability under the Wells Credit Facility, will be sufficient to meet its operating and capital expenditure needs for the next twelve months.

Term Loan

On December 7, 2011, the Company obtained the Term Loan funded by an affiliate of Golden Gate Capital. The Term Loan bears interest at a rate of 5.50% per annum to be paid in cash, due and payable quarterly in arrears, and 7.50% per annum, due and payable in kind (“PIK”) annually in arrears, with such PIK interest then due and payable being added to the outstanding principal balance of the Term Loan at the end of each fiscal year, and with adjustments to the cash and PIK portion of the interest rate in accordance with the Term Loan agreement, following principal prepayments. Annual cash interest for fiscal 2014 is expected to be approximately $4 million. The Term Loan is guaranteed by each of the Company’s subsidiaries and will be guaranteed by any future domestic subsidiaries of the Company. The Term Loan is secured by liens and security interests with (a) a first priority security interest in all long-term assets of the Company and PacSun Stores and all other assets not subject to a first lien and security interest pursuant to the Wells Credit Facility, (b) a first priority pledge of the equity interests of Miraloma and (c) a second priority security interest in all assets of the Company and PacSun Stores subject to a first lien and security interest pursuant to the Wells Credit Facility. The Term Loan also contains covenants substantially identical to those in the Wells Credit Facility. The principal balance and any unpaid interest related to the Term Loan is due on December 7, 2016. The Company is not subject to any financial covenant restrictions under the Term Loan.

Mortgage Debt

On August 20, 2010, the Company, through its wholly-owned subsidiaries, Miraloma and PacSun Stores, executed two promissory notes pursuant to which borrowings in an aggregate amount of $29.8 million from American National Insurance Company (“Anico”) were incurred. The principal and interest payments are based on a 25-year amortization schedule, with the remaining principal balances and any accrued and unpaid interest due on September 1, 2017.

The original note executed by Miraloma (the "Miraloma Note") is secured by a deed of trust on the building and land comprising the Company’s principal executive offices in Anaheim, California and is non-recourse to the Company. The Miraloma Note does not contain any financial covenants. In connection with this transaction, the Company transferred the building and related land securing the Miraloma Note to Miraloma and entered into a lease for the building and land with Miraloma. The original note executed by PacSun Stores (the "PacSun Stores Note") is secured by a mortgage on the Company’s leasehold interest in the building and land comprising the Company’s distribution center in Olathe, Kansas, and is unconditionally guaranteed by the Company. The PacSun Stores Note does not contain any financial covenants.

On July 1, 2014, the Company modified certain terms associated with the Miraloma Note and the PacSun Stores Note. The note modification executed by Miraloma (the "New Miraloma Note”) (i) provided for an additional advance of $0.3 million to fund the payment of fees, commissions and expenses incurred by the Company in connection with the New Miraloma Note, resulting in a new principal balance of $15.9 million; (ii) extended the maturity date of the Note to July 1, 2021; (iii) reduced the interest rate to 5.25% per annum; and (iv) provided that the Note may not be prepaid prior to July 1, 2017 and thereafter may be prepaid only upon payment of prepayment fees pursuant to a schedule set forth in the note modification. The amended note executed by PacSun Stores (the "New PacSun Stores Note”) (i) provided for an additional advance of $0.2 million to fund the payment of fees, commissions and expenses incurred by the Company in connection with the New PacSun Stores Note, resulting in a new principal balance of $12.3 million; (ii) extended the maturity date of the Note to July 1, 2021; (iii) reduced the interest rate to 5.25% per annum; and (iv) provided that the Note may not be prepaid prior to July 1, 2017 and thereafter may be prepaid only upon payment of prepayment fees pursuant to a schedule set forth in the note modification.

As of November 1, 2014, the remaining aggregate principal payments due under the Term Loan and the Mortgage Debt are as follows:

	(In thousands)
	2014		2015		2016		2017		2018		Thereafter		Total
Mortgage Debt	$	131	$	541	$	570	$	600	$	633	$	25,583	$	28,058
Term Loan (1)	—		—		70,293		—		—		—		70,293
Total	$	131	$	541	$	70,863	$	600	$	633	$	25,583	$	98,351
			Less: Term Loan discount										(9,343		)
			Less: current portion of long-term debt										(534		)
			Total long-term debt										$	88,474

⁽¹ Upon maturity of the Term Loan, $26.6 million of PIK interest will become due and payable, of which $10.3 million is included in the Term Loan balance and $4.0 million is accrued and included in other current liabilities as of November 1, 2014.

The Company recorded interest expense of $3.9 million and $3.6 million during the third quarters of fiscal 2014 and 2013, respectively, and $11.8 million and $10.6 million in the first three quarters of fiscal 2014 and 2013, respectively.

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Other Current Liabilities

9 Months Ended

Nov. 01, 2014

Other Liabilities Disclosure [Abstract]

Other Current Liabilities

OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

	November 1, 2014		February 1, 2014
	(In thousands)
Accrued compensation and benefits	$	10,995	$	7,858
Accrued gift cards	6,066		9,036
Sales taxes payable	2,187		1,549
Other	25,535		18,843
Total other current liabilities	$	44,783	$	37,286

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Debt (Tables)

9 Months Ended

Nov. 01, 2014

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt

As of November 1, 2014, the remaining aggregate principal payments due under the Term Loan and the Mortgage Debt are as follows:

	(In thousands)
	2014		2015		2016		2017		2018		Thereafter		Total
Mortgage Debt	$	131	$	541	$	570	$	600	$	633	$	25,583	$	28,058
Term Loan (1)	—		—		70,293		—		—		—		70,293
Total	$	131	$	541	$	70,863	$	600	$	633	$	25,583	$	98,351
			Less: Term Loan discount										(9,343		)
			Less: current portion of long-term debt										(534		)
			Total long-term debt										$	88,474

⁽¹ Upon maturity of the Term Loan, $26.6 million of PIK interest will become due and payable, of which $10.3 million is included in the Term Loan balance and $4.0 million is accrued and included in other current liabilities as of November 1, 2014.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Nov. 01, 2014

Accounting Policies [Abstract]

Income Taxes

Income Taxes

The Company calculates its interim income tax provision in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 270, “Interim Reporting” (“ASC 270”) and ASC Topic 740, “Accounting for Income Taxes” (“ASC 740”). At the end of each interim period, the Company estimates the annual effective tax rate and applies that rate to its ordinary quarterly earnings. The tax expense or benefit related to significant, unusual, or extraordinary items is recognized in the interim period in which those items occur. In addition, the effect of changes in enacted tax laws, rates or tax status is recognized in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including the expected operating income for the year, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets generated in the current fiscal year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or the tax environment changes.

Earnings Per Share

Earnings Per Share

Basic earnings per share is computed using the weighted-average number of common shares outstanding. Diluted earnings per share is computed using the weighted-average number of common shares outstanding adjusted for the incremental shares attributed to outstanding options to purchase common stock and nonvested restricted stock using the treasury stock method, if dilutive. In periods where a net loss is reported, incremental shares are excluded as their effect would be anti-dilutive. In such circumstances, the weighted-average number of shares outstanding in the basic and diluted earnings per common share calculations will be the same. Anti-dilutive options and nonvested shares are excluded from the computation of diluted earnings per share because either the option exercise price or the grant date fair value of the nonvested share is greater than the market price of the Company’s common stock. Options to purchase 1.3 million shares of common stock in the third quarter of fiscal 2014, and 4.2 million and 6.6 million shares of common stock in the first three quarters of fiscal 2014 and 2013, respectively, were excluded from the computation of diluted earnings per share as their effect would have been anti-dilutive.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In August 2014 the FASB issued Accounting Standards Update ("ASU") No. 2014-15, "Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern" ("ASU 2014-15"). This ASU sets forth guidance regarding management’s responsibility to (1) evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern, and (2) provide related footnote disclosures. ASU 2014-15 requires management to assess the Company’s ability to continue as a going concern by incorporating and expanding upon certain principles that currently exist in U.S. auditing standards. Specifically, this update provided a definition of the term “substantial doubt,” and added new Subtopic 205-40, Presentation of Financial Statements-Going Concern, which (1) requires an evaluation every reporting period, including interim periods, (2) sets forth principles for considering the mitigating effect of management’s plans, (3) mandates certain disclosures when substantial doubt is alleviated as a result of the consideration of management’s plans, (4) mandates an express statement, and other disclosures, when substantial doubt is not alleviated, and (5) requires an assessment for a period of one year after the date that the financial statements are issued, or are available to be issued. The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption of this ASU is permitted. The Company does not expect the adoption of ASU 2014-15 to have a material impact on its financial position or results of operations.

In May 2014, the FASB issued ASU No. 2014-09, "Revenue From Contracts with Customers" ("ASU 2014-09"). The ASU amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The new standard is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled to when products are transferred to customers. The Company is required to adopt ASU 2014-09 for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. The new revenue accounting standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. Based on the Company's evaluation of the ASU, its adoption of this update is not expected to have a material impact on the Company's financial position or results of operations.

In April 2014, the FASB issued ASU No. 2014-08, "Presentation of Financial Statements and Property, Plant, and Equipment" and "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" ("ASU 2014-08"). The ASU amendment changes the requirements for reporting discontinued operations in Subtopic 205-20. The amendment is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2014. Early adoption is permitted. The Company has adopted ASU 2014-08 as of the beginning of its fourth fiscal quarter of 2014. Based on the Company's evaluation of the ASU, the adoption of this ASU is not expected to have a material impact on the Company's financial position or results of operations.

Stock Compensation

The Company accounts for stock-based compensation expense in accordance with ASC Topic 718, “Stock Compensation”. The Company uses the Black-Scholes option-pricing model to estimate the grant date fair value of its stock options. Forfeitures are estimated at the date of grant based on historical rates and reduce the compensation expense to be recognized during the vesting period. The expected term of options granted is derived primarily from historical data on employee exercises adjusted for expected changes to option terms, if any. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant. Expected volatility is based primarily on the historical volatility of the Company’s common stock. The Company records stock-based compensation expense using the straight-line method over the vesting period, which is generally three to four years. The Company’s stock-based awards generally begin vesting one year after the grant date and, for stock options, expire in seven to ten years or three months after termination of employment with the Company. The Company’s stock-based compensation expense resulted from awards of stock options, restricted stock, and stock appreciation rights, as well as from shares issued under the ESPP.

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Fair Value Measurements

9 Months Ended

Nov. 01, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

The Company measures its financial assets and liabilities at fair value on a recurring basis and measures its nonfinancial assets and liabilities at fair value as required or permitted.

Fair value is defined as the price that would be received pursuant to the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. In order to determine the fair value of certain assets and liabilities, the Company applies the three-level hierarchy of valuation techniques based upon whether the inputs reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs) or reflect the Company’s assumptions of market participant valuation (unobservable inputs) and requires the use of observable inputs if such data is available without undue cost and effort. The hierarchy is as follows:

• Level 1 — quoted prices for identical instruments in active markets.

• Level 2 — inputs other than Level 1 inputs, which are observable either directly or indirectly.

• Level 3 — unobservable inputs.

Level 3 assumptions are, by their nature, inherently uncertain and the effect of changes in estimates may result in a significantly lower or higher fair value measurement.

Recurring Fair Value Measurements

Derivative Liability

The Series B Preferred shares are required to be measured at fair value each reporting period. The fair value of the Series B Preferred shares was estimated using an option-pricing model that requires Level 3 inputs, which are highly subjective and determined using the following significant assumptions as of:

	November 1, 2014	November 2, 2013
Stock price	$1.52	$2.59
Conversion price	$1.75	$1.75
Expected volatility	76%	72%
Expected term (in years)	7.1	8.1
Risk free interest rate	2.05%	2.34%
Expected dividends	$—	$—

The following table presents the activity recorded for the derivative liability during the first three quarters ended:

	November 1, 2014			November 2, 2013
	(In thousands)
Beginning balance	$	30,720		$	20,082
(Gain) loss on change in fair value	(1,225		)	9,290
Balance at end of first quarter	29,495			29,372
(Gain) loss on change in fair value	(10,434		)	21,154
Balance at end of second quarter	19,061			50,526
(Gain) loss on change in fair value	(4,881		)	(23,444		)
Ending balance	$	14,180		$	27,082

Changes in the fair value of the derivative liability are included in (gain) loss on derivative liability in the accompanying Condensed Consolidated Statement of Operations and Comprehensive Operations.

Non-Recurring Fair Value Measurements

On a non-recurring basis, using a discounted cash flow model, the Company measures certain of its store-level long-lived assets at fair value based on Level 3 inputs including, but not limited to, comparable store sales and margin growth, projected operating costs based primarily on historical trends, and an estimated weighted-average cost of capital rate. During each of the first three quarters of fiscal 2014 and 2013 the Company recorded 2.0 million of impairment charges in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Operations. In addition, during the third quarter of 2014, the Company determined that certain software previously capitalized for internal use was abandoned. As a result, the Company recorded an impairment charge of $1.1 million and accrued approximately $0.4 million related to future software maintenance costs.

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Income Taxes

9 Months Ended

Nov. 01, 2014

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The provisions codified within ASC 740 require companies to assess whether valuation allowances should be established against their deferred tax assets based on consideration of all available evidence using a “more likely than not” standard. In accordance with ASC 740, a full valuation allowance was established during the fourth quarter of fiscal 2009 and continues to be maintained on all federal and the majority of state deferred tax assets. Remaining net state deferred tax assets of approximately $4 million were not reserved as the Company concluded it is more likely than not that these net deferred tax assets would be utilized before expiration. The Company has discontinued recognizing federal and certain state income tax benefits until it is determined that it is more likely than not that the Company will generate sufficient taxable income to realize the deferred income tax assets.

The Company continues to monitor whether an ownership change has occurred under Internal Revenue Code Section 382 (“Section 382”). Based on available information at the reporting date, the Company believes it has not experienced an ownership change through the quarter ended November 1, 2014. The determination of whether or not an ownership change under Section 382 has occurred requires the Company to evaluate certain acquisitions and dispositions of ownership interests over a rolling three-year period. As a result, future acquisitions and dispositions could result in an ownership change of the Company under Section 382. If an ownership change were to occur, the Company’s ability to utilize federal net operating loss carryforwards could be significantly limited.

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Shareholders' Equity

9 Months Ended

Nov. 01, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Shareholders' Equity

SHAREHOLDERS’ EQUITY

Preferred Stock

In conjunction with the Term Loan, the Company issued the Series B Preferred to an affiliate of Golden Gate Capital which, based on the initial conversion ratio, gives that affiliate the right to purchase up to 13.5 million shares of the Company’s common stock. The Series B Preferred shares have an exercise price initially equal to $1.75 per share of the Company’s underlying common stock. The initial holder of the Series B Preferred is entitled to customary registration rights with respect to the underlying common stock. See Note 10, “Fair Value Measurements – Recurring Fair Value Measurements” for further discussion on the accounting treatment of the Series B Preferred.

Stock-Based Compensation

The Company maintains two stock-based incentive plans: (1) the 2005 Performance Incentive Plan (the “Performance Plan”) and (2) the amended and restated Employee Stock Purchase Plan (the “ESPP”). The types of awards that may be granted under the Performance Plan include stock options, stock appreciation rights, restricted stock, and other forms of awards granted or denominated in the Company’s common stock or units of the Company’s common stock. Persons eligible to receive awards under the Performance Plan include officers or employees of the Company or any of its subsidiaries, directors of the Company and certain consultants and advisors to the Company or any of its subsidiaries. The vesting of awards under the Performance Plan is determined at the date of grant. Each award expires on a date determined at the date of grant; however, the maximum term of options and stock appreciation rights under the Performance Plan is ten years after the grant date of the award. As of November 1, 2014, the maximum number of shares of the Company’s common stock that was available for award grants under the Performance Plan was 2.8 million shares. Any shares subject to awards under prior stock plans that are canceled, forfeited or otherwise terminate without having vested or been exercised, as applicable, will become available for future award grants under the Performance Plan. The Performance Plan will terminate on March 22, 2015, unless terminated earlier by the Company’s Board of Directors.

The Company accounts for stock-based compensation expense in accordance with ASC Topic 718, “Stock Compensation”. The Company uses the Black-Scholes option-pricing model to estimate the grant date fair value of its stock options. Forfeitures are estimated at the date of grant based on historical rates and reduce the compensation expense to be recognized during the vesting period. The expected term of options granted is derived primarily from historical data on employee exercises adjusted for expected changes to option terms, if any. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant. Expected volatility is based primarily on the historical volatility of the Company’s common stock. The Company records stock-based compensation expense using the straight-line method over the vesting period, which is generally three to four years. The Company’s stock-based awards generally begin vesting one year after the grant date and, for stock options, expire in seven to ten years or three months after termination of employment with the Company. The Company’s stock-based compensation expense resulted from awards of stock options, restricted stock, and stock appreciation rights, as well as from shares issued under the ESPP.

Stock Options

Under the Performance Plan, incentive and nonqualified stock options have been granted to employees and directors to purchase common stock at prices equal to the fair value of the Company’s shares at the respective grant dates. No stock options were granted by the Company during the first three quarters of fiscal 2014 or fiscal 2013. A summary of stock option (incentive and nonqualified) activity for the first three quarters of fiscal 2014 is presented below:

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Yrs.)	Aggregate Intrinsic Value ($000s)
Outstanding at February 1, 2014	2,209,379		$	5.11
Granted	—		—
Exercised	—		—
Forfeited or expired	(280,214	)	11.64
Outstanding at November 1, 2014	1,929,165		$	4.16	2.0	$	5
Vested and expected to vest at November 1, 2014	1,926,855		$	4.17	2.0	$	5
Exercisable at November 1, 2014	1,894,254		$	4.19	2.0	$	4

There were no and 10,375 stock options exercised during the first three quarters of fiscal 2014 and 2013, respectively. The total intrinsic value of options exercised during the first three quarters of fiscal 2013 was immaterial.

Restricted Stock Awards

A summary of service-based restricted stock awards activity under the Performance Plan for the first three quarters of fiscal 2014 is presented in the following table. Except as described below, such restricted stock awards contain a service-based restriction as to vesting. These awards generally vest over 4 years with 25% of the grant vesting each year on the anniversary of the grant date.

	Shares		Weighted- Average Grant-Date Fair Value
Outstanding at February 1, 2014	1,319,571		$	2.13
Granted	100,000		2.51
Vested	(422,230	)	2.31
Forfeited	(139,483	)	2.30
Outstanding at November 1, 2014	857,858		$	2.06

The weighted-average grant-date fair value per share of service-based restricted stock awards granted during the first three quarters of fiscal 2014 and 2013 was 2.51 and $2.53, respectively. The total fair value of awards vested during the first three quarters of fiscal 2014 and 2013 was $1.2 million and $1.5 million, respectively.

During the first quarter of fiscal 2012, the Company granted 675,000 performance-based restricted stock awards which only vest upon the achievement of certain financial targets. The weighted-average grant-date fair value per share of performance-based restricted stock awards granted during fiscal 2012 was $1.77. There were no performance-based restricted stock awards granted in the first three quarters of fiscal 2014.

Restricted Stock Units

A summary of restricted stock units activity under the Performance Plan for the first three quarters of fiscal 2014 is presented below. Restricted stock units contain a service-based restriction as to vesting. These awards generally vest 100% on the first anniversary of the grant date.

	Shares		Weighted- Average Grant-Date Fair Value
Outstanding at February 1, 2014	122,480		$	3.47
Granted	150,000		2.25
Vested	(122,480	)	3.47
Forfeited	—		—
Outstanding at November 1, 2014	150,000		$	2.25

The weighted-average grant-date fair value per share of restricted stock awards units granted during the first three quarters of fiscal 2014 and 2013 was 2.25 and $3.47, respectively. The total fair value of awards vested during the first three quarters of fiscal 2014 and 2013 was $0.3 million and $0.4 million, respectively.

Stock-based compensation expense recognized related to nonvested stock options, restricted stock awards and restricted stock units during the third quarter of fiscal 2014 and 2013 was $0.4 million and $0.5 million, respectively, and during the first three quarters of fiscal 2014 and 2013 was $1.2 million and $2.2 million, respectively.

At November 1, 2014, the Company had approximately $1.6 million of stock-based compensation cost related to non-vested stock options, service-based restricted stock awards, performance-based restricted stock awards, and restricted stock units expected to be recognized over a weighted-average period of approximately 1.7 years.

Employee Stock Purchase Plan (“ESPP”)

The Company’s ESPP provides a method for Company employees to voluntarily purchase Company common stock at a 10% discount from fair market value as of the beginning or the end of each purchasing period, whichever is lower. Historically, the Company's purchase period has been equal to six months; however, following the June 2013 ESPP purchase, the Company extended the purchase period to one year. The ESPP covers substantially all employees who have three months of service with the Company, excluding senior executives. The ESPP is intended to constitute an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended. On March 20, 2014, the Board of Directors approved an amendment to the ESPP to increase the number of authorized shares thereunder from 2.1 million shares to 2.5 million shares. Such amendment was approved by the shareholders at the 2014 annual meeting of shareholders. Shares issued under the ESPP during the first three quarters of fiscal 2014 and 2013 were 174,335 and 149,398, respectively.

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Commitments and Contingencies

9 Months Ended

Nov. 01, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Litigation

Charles Pfeiffer, individually and on behalf of other aggrieved employees vs. Pacific Sunwear of California, Inc. and Pacific Sunwear Stores Corp., Superior Court of California, County of Riverside, Case No. 1100527. On January 13, 2011, the plaintiff in this matter filed a lawsuit against the Company under California’s private attorney general act alleging violations of California’s wage and hour, overtime, meal break and rest break rules and regulations, among other things. The complaint seeks an unspecified amount of damages and penalties. The Company has filed an answer denying all allegations regarding the plaintiff’s claims and asserting various defenses. The Company is currently in the discovery phase of this case. As the ultimate outcome of this matter is uncertain, no amounts have been accrued by the Company as of the date of this report. Depending on the actual outcome of this case, provisions could be recorded in the future which may have a material adverse effect on the Company’s operating results.

Tamara Beeney, individually and on behalf of other members of the general public similarly situated vs. Pacific Sunwear of California, Inc. and Pacific Sunwear Stores Corporation, Superior Court of California, County of Orange, Case No. 30-2011-00459346-CU-OE-CXC. On March 18, 2011, the plaintiff in this matter filed a putative class action lawsuit against the Company alleging violations of California’s wage and hour, overtime, meal break and rest break rules and regulations, among other things. The complaint seeks class certification, the appointment of the plaintiff as class representative, and an unspecified amount of damages and penalties. The Company has filed an answer denying all allegations regarding the plaintiff’s claims and asserting various defenses. On February 21, 2014, the plaintiff filed her motion to certify a class with respect to several claims. The Company’s opposition to such motion was filed on June 30, 2014 and the plaintiff's reply to such opposition was filed on November 4, 2014. The hearing on the plaintiff’s motion will now be held on February 2, 2015. As the ultimate outcome of this matter is uncertain, no amounts have been accrued by the Company as of the date of this report. Depending on the actual outcome of this case, provisions could be recorded in the future which may have a material adverse effect on the Company’s operating results.

The Company is also involved from time to time in other litigation incidental to its business. The Company currently cannot assess whether the outcome of current litigation will likely have a material adverse effect on its results of operations or financial condition and, from time to time, the Company may make provisions for probable litigation losses. Depending on the actual outcome of pending litigation, charges in excess of any provisions could be recorded in the future, which may have a material adverse effect on the Company’s operating results.

Indemnities, Commitments and Guarantees

During the normal course of business, the Company agreed to certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. These indemnities, commitments and guarantees include those given to various lessors in connection with facility leases for certain claims arising from such facility or lease and indemnities to directors and officers of the Company to the maximum extent permitted under the laws of the State of California. The duration of these indemnities, commitments and guarantees varies, and in certain cases, is indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. The Company has not recorded any liability for these indemnities, commitments and guarantees in the accompanying Condensed Consolidated Balance Sheets other than as disclosed below.

Letters of Credit

The Company has issued guarantees in the form of commercial letters of credit, of which there were approximately $9 million and $10 million outstanding at November 1, 2014 and February 1, 2014, respectively, as security for merchandise shipments from overseas. All in-transit merchandise covered by letters of credit is accrued for in accounts payable.

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Other Current Liabilities - Schedule of Other Current Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Nov. 01, 2014	Feb. 01, 2014
Other Liabilities Disclosure [Abstract]
Accrued compensation and benefits	$ 10,995	$ 7,858
Accrued gift cards	6,066	9,036
Sales taxes payable	2,187	1,549
Other	25,535	18,843
Total other current liabilities	$ 44,783	$ 37,286

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Segment Reporting - Additional Information (Detail)	3 Months Ended
	Nov. 01, 2014 Segment
Segment Reporting [Abstract]
Number of operating segments	3
Number of reporting segments	1

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Impairment of Long-Lived Assets (Tables)

9 Months Ended

Nov. 01, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Long-Lived Assets Tested for Impairment

	For the Third Quarter Ended				For the Three Quarters Ended
	(In thousands)
	November 1, 2014		November 2, 2013		November 1, 2014		November 2, 2013
Impairment charges from continuing operations	$	377	$	600	$	2,040	$	2,031

Details of Long-Lived Assets Tested and Impaired

	November 1, 2014		November 2, 2013
	(In thousands)
Carrying value of assets tested for impairment	$	1,466	$	3,803
Carrying value of assets with impairment	$	558	$	822
Fair value of assets impaired	$	181	$	222
Number of stores tested for impairment	48		57
Number of stores with impairment	12		8

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Discontinued Operations (Tables)

9 Months Ended

Nov. 01, 2014

Discontinued Operations and Disposal Groups [Abstract]

Details of Operating Results Included in Discontinued Operations

The following table details the operating results included in discontinued operations for the periods presented:

	For the Third Quarter Ended			For the Three Quarters Ended
	(In thousands)
	November 2, 2013			November 2, 2013
Net sales	$	3,783		$	12,460
Cost of goods sold, including buying, distribution and occupancy costs	3,210			9,880
Gross margin	573			2,580
Selling, general and administrative expenses	1,019			3,778
Operating loss	(446		)	(1,198		)
Income tax expense	27			43
Loss from discontinued operations	$	(473	)	$	(1,241	)

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Fair Value Measurements - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
	Nov. 01, 2014	Nov. 02, 2013	Nov. 01, 2014	Nov. 02, 2013
Fair Value Disclosures [Abstract]
Impairment charges from continuing operations	$ 377,000	$ 600,000	$ 2,040,000	$ 2,031,000
Impairment of software	1,100,000		1,100,000
Accrued software maintenance costs	$ 400,000		$ 400,000

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Shareholders' Equity - Stock Based Compensation - Additional Information (Detail) In Millions, unless otherwise specified	9 Months Ended
	Nov. 01, 2014 OptionPlan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock-based incentive plans	2
Stock-based awards vesting period	1 year
Period in which stock option expires under condition	3 months
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum term of options and stock appreciation rights under the Performance Plan	4 years
Period in which stock option expires under condition one	10 years
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum term of options and stock appreciation rights under the Performance Plan	3 years
Period in which stock option expires under condition one	7 years
Performance Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares of the Company's common stock that was available for award grants under the Performance Plan	2.8
Performance Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum term of options and stock appreciation rights under the Performance Plan	10 years

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Nov. 01, 2014	Nov. 02, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (3,365)	$ (26,184)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	18,060	19,443
Long Lived Assets Impairment Charges	3,119	2,031
Loss on disposal of property and equipment	122	60
(Gain) loss on derivative liability	(16,540)	7,000
Amortization of debt discount	2,239	1,611
Non-cash stock-based compensation	1,202	2,200
Change in assets and liabilities:
Inventories	(46,084)	(46,361)
Other current assets	(2,451)	(5,000)
Other assets	(1,600)	1,115
Accounts payable	35,603	27,813
Other current liabilities	7,130	(2,352)
Deferred lease incentives	(1,299)	(2,084)
Deferred rent	(513)	(406)
Other long-term liabilities	97	4
Net cash used in operating activities	(4,280)	(21,110)
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Purchases of property, equipment and intangible assets	(11,320)	(7,160)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgage borrowings	618	0
Principal payments under mortgage borrowings	(422)	(429)
Payments of Debt Issuance Costs	(116)	0
Principal payments under capital lease obligations	(344)	(347)
Proceeds from exercise of stock options	374	240
Net cash provided by (used in) financing activities	110	(536)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(15,490)	(28,806)
CASH AND CASH EQUIVALENTS, beginning of period	27,769	48,733
CASH AND CASH EQUIVALENTS, end of period	12,279	19,927
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	4,656	4,179
Cash paid for income taxes	874	601
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS:
Property and equipment purchases accrued at end of period	$ 975	$ 1,229

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Derivative Liability

9 Months Ended

Nov. 01, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Liability

DERIVATIVE LIABILTY

As disclosed in Note 9, "Shareholders' Equity," the Company issued 1,000 shares of its Convertible Series B Preferred Stock (the “Series B Preferred”) in connection with the 5-year, $60 million senior secured term loan (the “Term Loan”), funded by an affiliate of Golden Gate Capital. The fair value of the Series B Preferred at issuance was approximately $15 million which was recorded as a derivative liability. As of November 1, 2014 and February 1, 2014, the fair value of the derivative liability was approximately $14 million and $31 million, respectively. See Note 10, “Fair Value Measurements” for further discussion on the derivative liability.

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Nature of Business - Additional Information (Detail)	Nov. 01, 2014 State Store
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of stores leased and operated	620
Number of states	50

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Debt - Summary of Remaining Aggregate Principal Payments Due Under Term Loan and Mortgage Debt (Details) (USD $)	Nov. 01, 2014
Debt Instrument [Line Items]
2014	$ 131,000
2015	541,000
2016	70,863,000
2017	600,000
2018	633,000
Thereafter	25,583,000
Total	98,351,000
Less: Term Loan discount	(9,343,000)
Less: current portion of long-term debt	(534,000)
Total long-term debt	88,474,000
Mortgage Debt [Member]
Debt Instrument [Line Items]
2014	131,000
2015	541,000
2016	570,000
2017	600,000
2018	633,000
Thereafter	25,583,000
Total	28,058,000
Term Loan [Member]
Debt Instrument [Line Items]
2014	0	[1]
2015	0	[1]
2016	70,293,000	[1]
2017	0	[1]
2018	0
Thereafter	0
Total	70,293,000	[1]
Due and payable upon Term Loan maturity	26,600,000
PIK interest included in Term Loan balance	10,300,000
Accrued interest	$ 4,000,000

[1] Upon maturity of the Term Loan, $26.6 million of PIK interest will become due and payable, of which $10.3 million is included in the Term Loan balance and $4.0 million is accrued and included in other current liabilities as of November 1, 2014.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Nov. 01, 2014

Accounting Policies [Abstract]

Reconciliation of Denominator of Each Net Income (Loss) per Share Calculation

The table below sets forth the reconciliation of the denominator of each net (loss) income per share calculation for the third quarter and first three quarters of fiscal years 2014 and 2013:

	For the Third Quarter Ended		For the Three Quarters Ended
	(in thousands)
	November 1, 2014	November 2, 2013	November 1, 2014	November 2, 2013
Shares used in computing basic net (loss) income per share	69,235	68,568	69,018	68,425
Dilutive effect of options, restricted stock and convertible preferred stock	—	6,947	—	—
Shares used in computing diluted net (loss) income per share	69,235	75,515	69,018	68,425