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): February 28, 2006

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:

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

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

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

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

TABLE OF CONTENTS

	Item 2.02 Results of Operations and Financial Condition
	Item 9.01 Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
EXHIBIT 99.1

Item 2.02 Results of Operations and Financial Condition

On February 28, 2006, Pacific Sunwear of California, Inc. (NASDAQ:PSUN) (the “Company”) announced financial results for its fourth quarter and fiscal year ended January 28, 2006. 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 February 28, 2006

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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.

	PACIFIC SUNWEAR OF CALIFORNIA, INC.
Dated: February 28, 2006	/s/ GERALD M. CHANEY
	Gerald M. Chaney
	Senior Vice President, Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release issued by the Company on February 28, 2006

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EX-99.1

EXHIBIT 99.1

CONTACT:
Gar Jackson
Director of Investor Relations
(714) 414-4049

FOR IMMEDIATE RELEASE

PACIFIC SUNWEAR ANNOUNCES 17 PERCENT INCREASE IN
FOURTH QUARTER EARNINGS PER SHARE AND 21 PERCENT
INCREASE IN FISCAL 2005 EARNINGS PER SHARE

ANAHEIM, CA/February 28, 2006 — Pacific Sunwear of California, Inc. (NASDAQ:PSUN) today reported that net income for the fourth quarter of fiscal 2005 increased 15 percent to $47.0 million, compared to $40.7 million for the fourth quarter of fiscal 2004. Total sales for the fourth quarter (13 weeks) ended January 28, 2006 were $424.9 million, an increase of 12 percent over total sales of $379.7 million for the fourth quarter (13 weeks) ended January 29, 2005. Earnings per diluted share increased 17 percent to $0.63 compared to $0.54 per diluted share for the fourth quarter of fiscal 2004. Same-store sales increased 2.2 percent for the comparable thirteen-week period ended January 28, 2006.

Net income for fiscal 2005 increased 18 percent to $126.2 million, compared to $106.9 million for fiscal 2004. Earnings per diluted share increased 21 percent to $1.67 compared to $1.38 per diluted share for fiscal 2004. Total sales for fiscal 2005 (fifty-two weeks) were $1.39 billion, an increase of 13 percent over total sales of $1.23 billion for fiscal 2004. Same-store sales increased 3.2 percent during fiscal 2005.

“I am pleased with our record fourth quarter and full year earnings performance,” commented Seth Johnson, Chief Executive Officer. “For the year we improved our operating margin to a record 14.2 percent and achieved 21 percent earnings per share growth over the prior year,” Johnson concluded.

Stock Repurchase Program

During the fourth quarter of fiscal 2005, the Company repurchased a total of 872,700 shares of its common stock at an average price of $25.10. These repurchases occurred under the $100.0 million share repurchase authorization approved by the Company’s board of directors on May 12, 2005. During fiscal 2005, the Company repurchased 2,808,300 shares of its common stock at an average price of $23.37. At the end of the fourth quarter, $49.9 million remained available for future repurchases.

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

Fiscal 2006 Outlook

Based on February sales results, the Company is being cautious in its first quarter 2006 profit expectations. At this point the company is comfortable with earnings per share estimates in the range of $0.19 to $0.21 which includes $0.03 attributable to adjustments for stock option expenses as related to FAS 123R and pre-opening rent expenses as related to FASB Staff Position 13-1, Accounting for Rental Costs Incurred during a Construction Period. For year-over-year comparison purposes, this compares to first quarter 2005 non-GAAP earnings of $0.20 per diluted share, which includes the adjustments above. For the full fiscal year 2006, the Company is comfortable with net income growth estimates of 10 to 15 percent versus the prior year.

A reconciliation of first quarter fiscal 2005 reported GAAP earnings to the non-GAAP measures contained in this press release is set forth below.

Reconciliation of Q1 Earnings to Non-GAAP Disclosure

GAAP EPS as originally reported for Q1 2005	$	0.23
Less impact of stock option and pre-opening rent expenses		(0.03	)
Adjusted non-GAAP EPS for Q1 2005	$	0.20
GAAP net income as reported for Q1 2005	$	17,607
Less stock option expenses, tax-effected		(1,819	)
Less pre-opening rent, tax-effected		(535	)
Adjusted non-GAAP net income for Q1 2005	$	15,253

About Pacific Sunwear of California, Inc.

Pacific Sunwear, operating under two distinct retail concepts, is a leading specialty retailer of everyday casual apparel, accessories and footwear designed to meet the needs of active teens and young adults. As of February 25, 2006, the Company operated 814 PacSun stores, 96 PacSun Outlet stores and 196 d.e.m.o. stores for a total of 1,106 stores in 50 states and Puerto Rico. The Company intends to launch its third concept, One Thousand Steps, in April of 2006. PacSun’s website address is www.pacsun.com and merchandise carried at d.e.m.o. stores can be found at www.demostores.com.

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

Conference Call Information

The Company will be hosting a conference call today at 1:30 pm Pacific 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: 5558124. 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 Web site through midnight, February 28, 2007.

Pacific Sunwear Safe Harbor

This press release contains “forward-looking statements” made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Specifically, the statements contained in this press release concerning estimates of first quarter net income, earnings per fully-diluted share and our anticipated net earnings growth in 2006 are forward-looking statements. The Company intends that such forward-looking statements be subject to the safe harbors created thereby. The Company is hereby providing cautionary statements identifying important factors that could cause the Company’s actual results to differ materially from those projected in forward-looking statements of the Company herein. These forward-looking statements involve estimates, assumptions and uncertainties which could cause actual results to differ materially from those expressed in the statements. Such uncertainties include, among others, the following factors: our new concept is untested and may not be profitable or successful; we could experience delays in the time frame for introducing the new concept; changes in consumer demands and preferences, lower than expected sales levels, higher than estimated costs of goods sold or selling, general and administrative costs, competition from other retailers and uncertainties generally associated with apparel retailing; merchandising/fashion sensitivity; sales from private label merchandise; fluctuations in or lower than expected comparable store net sales results; expansion and management of growth; reliance on key personnel; dependence on single distribution facility; 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 or expansions; reliance on foreign sources of production; credit facility financial covenants 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 January 29, 2005 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.

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

PACIFIC SUNWEAR OF CALIFORNIA, INC.
SUMMARY STATEMENTS OF INCOME
(unaudited, in thousands except share and per share data)

	Fourth Quarter Ended				Fiscal Year Ended
	JAN. 28,		JAN. 29,		JAN. 28,		JAN. 29,
	2006		2005		2006		2005
Net sales	$	424,944	$	379,675	$	1,391,473	$	1,229,762
Gross margin		154,346		142,556		506,491		447,934
Selling, G&A expenses		80,599		77,781		309,218		277,921
Operating income		73,747		64,775		197,273		170,013
Interest income, net		1,841		714		5,673		1,889
Income before taxes		75,588		65,489		202,946		171,902
Income tax expense		28,579		24,761		76,734		64,998
Net income	$	47,009	$	40,728	$	126,212	$	106,904
Net income per share, basic	$	0.63	$	0.55	$	1.69	$	1.41
Net income per share, diluted	$	0.63	$	0.54	$	1.67	$	1.38
Wtd avg shares outstanding, basic		74,085,637		74,408,255		74,758,874		75,825,897
Wtd avg shares outstanding, diluted		74,846,162		75,856,319		75,713,793		77,464,115

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

	JAN. 28,		JAN. 29,
	2006		2005
ASSETS
Current assets:
Cash & cash equivalents	$	95,185	$	64,308
Short-term investments		74,911		79,223
Inventories		215,140		175,081
Other current assets		41,485		34,206
Total current assets		426,721		352,818
Property and equipment, net		355,822		304,222
Other long-term assets		25,018		20,738
Total assets	$	807,561	$	677,778
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	108,099	$	87,781
Income taxes payable		14,896		5,993
Current portion of long-term debt and capital leases		347		1,536
Total current liabilities		123,342		95,310
Deferred lease incentives		81,440		67,683
Deferred rent		28,748		26,826
Other long-term liabilities		27,241		29,925
Total liabilities		260,771		219,744
Total shareholder’s equity		546,790		458,034
Total liabilities and shareholders’ equity	$	807,561	$	677,778

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

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

	FOR THE FISCAL YEAR ENDED
	JAN. 28, 2006			JAN. 29, 2005
Cash flows from operating activities:
Net income	$	126,212		$	106,904
Depreciation & amortization		63,161			51,685
Loss on disposal of property and equipment		300			3,692
Tax benefits related to exercise of stock options		8,378			8,235
Changes in operating assets and liabilities:
Inventories		(40,380	)		(27,330	)
Accounts payable and accrued expenses		18,903			(766	)
Income taxes and deferred income taxes		5,043			(2,318	)
Deferred lease incentives		13,376			10,687
Other assets and liabilities		(10,728	)		(7,777	)
Net cash provided by operating activities		184,265			143,012
Cash flows from investing activities:
Purchases of short-term investments		(813,538	)		(1,200,070	)
Maturities of short-term investments		817,850			1,187,082
Capital expenditures		(109,174	)		(81,992	)
Net cash used in investing activities		(104,862	)		(94,980	)
Cash flows from financing activities:
Repurchases of common stock		(65,643	)		(109,502	)
Proceeds from exercise of stock options		18,667			18,194
Repayments under long-term debt and capital leases		(1,550	)		(2,056	)
Net cash used in financing activities		(48,526	)		(93,364	)
Net increase (decrease) in cash and cash equivalents		30,877			(45,332	)
Cash and cash equivalents, beginning of period		64,308			109,640
Cash and cash equivalents, end of period	$	95,185		$	64,308

PACIFIC SUNWEAR OF CALIFORNIA, INC.
SELECTED STORE OPERATING DATA

	JAN. 28,			JAN. 29,
	2006			2005
Stores open at beginning of fiscal year		990			877
Stores opened during the fiscal year		126			118
Stores closed during the fiscal year		(11	)		(5	)
Stores open at end of fiscal year		1,105			990
PacSun stores		811			744
Outlet stores		96			84
d.e.m.o. stores		198			162
Total stores		1,105			990
Total square footage at end of period (in 000’s)		3,931			3,448

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