Zumiez (ZUMZ)

8. Subsequent Event

On September 1, 2006, Zumiez Inc. entered into a secured credit agreement with Wells Fargo HSBC Trade Bank, N.A.  The Credit Agreement provides the Company with a senior revolving credit facility (the “new facility”) through August 30, 2009 of up to $25.0 million.  The New Facility replaces the Company’s $20.0 million secured revolving credit facility (the “prior facility”) with Bank of America, N.A., which terminated effective August 31, 2006.  The New Facility also contains financial covenants that require the Company to meet certain specified financial ratios, including, minimum net income after taxes, maximum leverage, and quick ratio.

6.  Subsequent Event

The Company was formerly a majority owned subsidiary of Zumiez Holdings LLC (the “Parent”), a holding company with no operating activities.  The financial position and operating results of the Parent are not included in the Company’s financial statements included in this quarterly report.  Subsequent to the end of the quarter the Parent was dissolved in connection with the Company’s recently completed initial public offering.

In May 2005, we completed an initial public offering of our common stock in which we sold 1,875,000 shares and our selling shareholders sold 1,250,000 shares.  Net proceeds from the offering totaled approximately $29.7 million, after payment of underwriters’ commissions and offering expenses.  We did not receive any of the proceeds from the sale of shares of our common stock by the selling shareholders.

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