8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

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

Date of report (Date of earliest event reported): November 18, 2008

PACIFIC SUNWEAR OF CALIFORNIA, INC.

(Exact Name of Registrant as Specified in Charter)

California (State or Other Jurisdiction of Incorporation)	0-21296 (Commission File Number)	95-3759463 (IRS Employer Identification No.)
3450 East Miraloma Avenue Anaheim, CA (Address of principal executive offices)		92806-2101 (Zip Code)

(714) 414-4000
Registrant’s telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99.1

Item 2.02 Results of Operations and Financial Condition

On November 18, 2008, Pacific Sunwear of California, Inc. (NASDAQ:PSUN) (the “Company”) announced financial results for the third quarter of fiscal 2008 ended November 1, 2008. The full text of the press release is furnished as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits.

     (c) Exhibits.

99.1 Press Release issued by the Company on November 18, 2008

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 hereunto duly authorized.

Dated: November 18, 2008

PACIFIC SUNWEAR OF CALIFORNIA, INC.
 

/s/ Michael L. Henry  

Michael L. Henry 

Sr. Vice President, Chief Financial Officer 

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release issued by the Company on November 18, 2008.

EX-99.1

Exhibit 99.1

CONTACT:
Gar Jackson
Vice President, Investor Relations
(714) 414-4049

FOR IMMEDIATE RELEASE

PACIFIC SUNWEAR ANNOUNCES THIRD QUARTER
EARNINGS RESULTS

ANAHEIM, CA/November 18, 2008 -— Pacific Sunwear of California, Inc. (NASDAQ:PSUN, the “Company”), today announced that total sales for the third quarter (13 weeks) of fiscal 2008 ended November 1, 2008, were $323.6 million, a 5% decrease from total sales of $341.9 million for the third quarter (13 weeks) of fiscal 2007 ended November 3, 2007. Total Company same-store sales decreased 7% during the third quarter of fiscal 2008.

The Company recorded a loss from continuing operations of $3.5 million, or $(0.05) per diluted share, for the third quarter of fiscal 2008 compared to income from continuing operations of $17.1 million, or $0.25 per diluted share, for the third quarter of fiscal 2007. Third quarter results for each period exclude the income statement impact of demo and One Thousand Steps due to the designation of these operations as discontinued operations during the first quarter of fiscal 2008 and the fourth quarter of fiscal 2007, respectively. Results for the third quarter of fiscal 2008 include an after-tax, non-cash goodwill impairment charge of approximately $4.2 million, of $0.06 per diluted share.

“It’s been well reported that consumer spending decelerated significantly in the September/October period, and we certainly saw this in our own results for the quarter. To strengthen our financial position in this economic downturn, we are focused on reducing our inventory, capital expenditures and other expenses,” commented Sally Frame Kasaks, Chief Executive Officer. “We remain encouraged by our e-commerce business, which continues to experience strong growth supported, in part, by enhancements to our website and supply chain.”

Total sales for the first three quarters (39 weeks) ended November 1, 2008 were $903.2 million, a 2% decrease from total sales of $921.7 million during the first three quarters (39 weeks) ended November 3, 2007. Same-store sales decreased 3% during the same period. For the first three quarters of fiscal 2008, the Company recorded a loss from continuing operations of $11.8 million, or $(0.18) per diluted share, compared to income from continuing operations of $26.1 million, or $0.37 per diluted share, in the first three quarters of fiscal 2007. Earnings results for the first three quarters include the asset impairment charge of $0.07 per diluted share incurred in the first quarter related to the materials handling equipment in the Company’s closed Anaheim distribution center and the non-cash goodwill impairment charge of $0.06 per diluted share incurred in the third quarter.

Financial Outlook

Given the significant downturn in the economic climate in recent months, the Company is updating its fiscal 2008 fourth quarter earnings forecast. As a result of additional promotional activity, and assuming a same-store sales decrease in the negative high-single digit range for the fourth quarter of fiscal 2008, the Company currently expects to report a

3450 East Miraloma Avenue • Anaheim, CA 92806 • (714) 414-4000

fourth quarter loss of $(0.03) to $(0.08) per diluted share, including an estimated gain of approximately $0.11 per diluted share from the previously-announced sale of its Anaheim distribution Center.

About Pacific Sunwear of California, Inc.

Pacific Sunwear is a leading lifestyle specialty retailer rooted in the youth culture and fashion vibe of Southern California. The Company sells casual apparel with a limited selection of accessories and footwear designed to meet the needs of teens and young adults. As of November 1, 2008, the Company operated 815 PacSun stores and 125 PacSun Outlet stores for a total of 940 stores in 50 states and Puerto Rico. PacSun’s website address is www.pacsun.com.

The Company will be hosting a conference call today at 4:30 pm Eastern Time. A telephonic replay of the conference call will be available beginning approximately two hours following the call for one week and can be accessed in the United States/Canada at (800) 642-1687 or internationally at (706) 645-9291; pass code: 72074140. For those unable to listen to the live Web broadcast on the Company’s investor relations website www.pacsun.com, or utilize the call-in replay, an archived version will be available on the Company’s investor relations website through midnight, March 11, 2009.

Pacific Sunwear Safe Harbor

This press release contains “forward-looking statements” including, without limitation, statements regarding the Company’s earnings projections for the fourth quarter of fiscal 2008. In each case, these statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company intends that these forward-looking statements be subject to the safe harbors created thereby. These statements are not historical facts and involve estimates, assumptions and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. In particular, current unfavorable economic conditions and reduced consumer spending make it very difficult to forecast sales, and therefore our assumption of same-store sales during the fourth quarter of fiscal 2008 may be wrong, with actual same-store sales being lower than we have assumed for purposes of our earnings projection. In addition, completion of the sale of our Anaheim distribution center remains subject to the satisfaction by the buyer of its undertaking to obtain financing for the property acquisition. Other uncertainties that could adversely affect our business and results include, among others, the following factors: additional adverse changes in economic conditions generally; additional adverse changes in consumer spending, changes in consumer demands and preferences; higher than anticipated markdowns and/or higher than estimated selling, general and administrative costs; competition from other retailers and uncertainties generally associated with apparel retailing; merchandising/fashion sensitivity; sales from private label merchandise; reliance on key personnel; economic impact of natural disasters, terrorist attacks or war/threat of war; shortages of supplies and/or contractors, as a result of natural disasters or terrorist acts, could cause unexpected delays in new store openings, relocations, renovations or expansions; reliance on foreign sources of production and other risks outlined in the company's SEC filings, including but not limited to the Annual Report on Form 10-K for the year ended February 2, 2008 and subsequent periodic reports filed with the Securities and Exchange Commission. Historical results achieved are not necessarily indicative of future prospects of the Company. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company assumes no obligation to update or revise any such forward-looking statements to reflect events or circumstances that occur after such statements are made. Nonetheless, the Company reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.

***MORE***

3450 East Miraloma Avenue • Anaheim, CA 92806 • (714) 414-4000

PACIFIC SUNWEAR OF CALIFORNIA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except share and per share data)

	Third Quarter Ended						First Three Quarters Ended
	Nov. 1,			Nov. 3,			Nov. 1,			Nov. 3,
	2008			2007			2008			2007
Net sales	$	323,612		$	341,874		$	903,204		$	921,754
Gross margin		92,776			114,726			263,499			291,770
Selling, G&A expenses		95,308			88,325			281,163			251,963
Operating (loss) income from continuing operations		(2,532	)		26,401			(17,664	)		39,807
Other expense (income), net		1,100			(652	)		461			(2,162	)
Income (loss) from continuing operations before income taxes		(3,632	)		27,053			(18,125	)		41,969
Income tax (benefit) expense		(112	)		9,910			(6,344	)		15,906
Income (loss) from continuing operations		(3,520	)		17,143			(11,781	)		26,063
Discontinued operations, net of tax		1,046			(37,180	)		(24,999	)		(61,660	)
Net loss	$	(2,474	)	$	(20,037	)	$	(36,780	)	$	(35,597	)
Income (loss) from continuing operations per share:
Basic	$	(0.05	)	$	0.25		$	(0.18	)	$	0.37
Diluted	$	(0.05	)	$	0.25		$	(0.18	)	$	0.37
Net loss per share:
Basic	$	(0.04	)	$	(0.29	)	$	(0.55	)	$	(0.51	)
Diluted	$	(0.04	)	$	(0.29	)	$	(0.55	)	$	(0.51	)
Weighted average shares outstanding:
Basic		64,968,707			69,765,113			67,182,918			69,635,543
Diluted		64,968,707			69,949,070			67,182,918			69,986,773

Note: All periods presented above exclude the income statement impact to continuing operations of demo and One Thousand Steps, which were designated as discontinued operations during the first quarter of fiscal 2008 and the fourth quarter of fiscal 2007, respectively. Continuing operations, as presented above, include the operations of the Company’s PacSun and PacSun Outlet stores only.

3450 East Miraloma Avenue • Anaheim, CA 92806 • (714) 414-4000

PACIFIC SUNWEAR OF CALIFORNIA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

	Nov. 1,		Feb. 2,		Nov. 3,
	2008		2008		2007
ASSETS
Current assets:
Cash & cash equivalents	$	4,817	$	97,587	$	37,179
Marketable securities		—		—		—
Inventories		233,814		170,182		242,210
Other current assets		73,635		52,818		71,604
Total current assets		312,266		320,587		350,993
Property and equipment, net		369,571		376,243		394,785
Other long-term assets		31,423		55,313		43,515
Total assets	$	713,260	$	752,143	$	789,293
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	113,799	$	62,349	$	106,352
Credit facility		43,100		—		—
Other current liabilities		47,365		71,107		66,113
Total current liabilities		204,264		133,456		172,465
Deferred lease incentives		55,054		74,012		78,201
Deferred rent		23,471		27,669		28,408
Other long-term liabilities		32,213		33,661		35,411
Total liabilities		315,002		268,798		314,485
Total shareholders’ equity		398,258		483,345		474,808
Total liabilities and shareholders’ equity	$	713,260	$	752,143	$	789,293

3450 East Miraloma Avenue • Anaheim, CA 92806 • (714) 414-4000

PACIFIC SUNWEAR OF CALIFORNIA, INC.
CONDENSED CONSOLIDATED CASH FLOWS
(unaudited, in thousands)

	THREE QUARTERS ENDED
	Nov. 1, 2008			Nov. 3, 2007
Cash flows from operating activities:
Net loss	$	(36,780	)	$	(35,597	)
Depreciation & amortization		58,743			58,295
Asset impairment		21,313			59,756
Non-cash stock based compensation		4,442			5,119
Tax (deficiencies) benefits from exercise of stock options		(1,408	)		320
Excess tax benefits related to stock-based compensation		—			(292	)
Loss on disposal of property and equipment		2,368			3,245
Changes in operating assets and liabilities:
Inventories		(63,632	)		(36,997	)
Accounts payable and other current liabilities		26,649			31,724
Other assets and liabilities		(28,030	)		(39,709	)
Net cash (used in)/provided by operating activities		(16,335	)		45,864
Cash flows from investing activities:
Capital expenditures		(68,503	)		(94,939	)
Proceeds from sale of property and equipment		275			—
Purchases of short-term investments		—			(171,400	)
Maturities of short-term investments		—			202,900
Purchases of long-term investments		—			(23,300	)
Net cash used in investing activities		(68,228	)		(86,739	)
Cash flows from financing activities:
Borrowings under credit facility		168,739			—
Principal payments under credit facility		(125,639	)		—
Repurchases of common stock		(52,911	)		—
Proceeds from exercise of stock options		1,613			2,237
Principal payments under capital lease obligations		(9	)		(42	)
Excess tax benefits related to stock-based compensation		—			292
Borrowings under long-term debt obligations		—			23,300
Net cash (used in) /provided by financing activities		(8,207	)		25,787
Net decrease in cash and cash equivalents		(92,770	)		(15,088	)
Cash and cash equivalents, beginning of period		97,587			52,267
Cash and cash equivalents, end of period	$	4,817		$	37,179

PACIFIC SUNWEAR OF CALIFORNIA, INC.
SELECTED STORE OPERATING DATA

	Fiscal 2008			Fiscal 2007
Stores open at beginning of fiscal year		1,107			1,199
Stores opened during the period		13			14
Stores closed during the period		(180	)		(93	)
Stores open at end of period		940			1,120

Note: Fiscal 2008 store closures include 153 demo stores. demo became a discontinued operation during the first quarter of fiscal 2008.

	Nov. 1, 2008				Nov. 3, 2007
	# of		Square Footage		# of		Square Footage
	Stores		(000s)		Stores		(000s)
PacSun stores		815		3,103		838		3,186
Outlet stores		125		505		119		481
demo stores		—		—		154		439
One Thousand Steps stores		—		—		9		24
Total stores		940		3,608		1,120		4,130

3450 East Miraloma Avenue • Anaheim, CA 92806 • (714) 414-4000