GADZOOKS INC - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

For Annual and Transition Reports Pursuant to Sections 13 or 15(d)
of the Securities Exchange Act of 1934

(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED FEBRUARY 2, 2002

or

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______

COMMISSION FILE NUMBER 0-26732

GADZOOKS, INC.
(Exact name of registrant as specified in its charter)

TEXAS 74-2261048
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

4121 INTERNATIONAL PARKWAY
CARROLLTON, TEXAS 75007
(Address of principal executive offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(972) 307-5555

Securities Registered Pursuant to Section 12(b) of the Act: NONE

Securities Registered Pursuant to Section 12(g) of the Act:

TITLE OF EACH CLASS
-------------------
Common Stock, $0.01 par value

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---

Indicate by check mark if disclosure of delinquent filers pursuant to item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
---
The aggregate market value of Common Stock held by non-affiliates of the
registrant on April 25, 2002 was approximately $117,109,093. All outstanding
shares of voting stock, except for shares held by executive officers and members
of the Board of Directors and their affiliates, are deemed to be held by
non-affiliates.

On April 25, 2002, the registrant had 9,157,169 shares of Common Stock
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part II incorporates information by reference from the registrant's Annual
Report to Shareholders for the fiscal year ended February 2, 2002, filed
herewith as Exhibit 13.

Part III incorporates information by reference from the registrant's
definitive proxy statement for the 2002 Annual Meeting of Shareholders, to be
filed with the Commission no later than 120 days after the end of the
registrant's fiscal year covered by this Form 10-K.

PART I

ITEM 1. BUSINESS.

Gadzooks, Inc. together with its wholly-owned subsidiaries, the "Company"
or "Gadzooks," is a mall-based specialty retailer of casual apparel and related
accessories for young men and women, principally between the ages of 14 and 18.
At the end of fiscal 2001, the Company operated 427 Gadzooks stores in both
metropolitan and middle markets in 40 states. During fiscal 2001, the Company
opened 56 new Gadzooks stores and closed four Gadzooks stores. The Company plans
to open approximately 12 new Gadzooks stores in fiscal 2002, seven of which were
open as of April 5, 2002.

In the second half of fiscal 2001, the Company began testing a new retail
concept with the opening of four Orchid stores in two states. The Orchid concept
caters to the unique innerwear and sleepwear needs of females between the ages
of 14 and 22. The Company is still evaluating the concept and could open one
more new store this year as part of the evaluation process.

Management believes that current demographic trends provide the Company
with the opportunity to continue its store expansion program. According to the
U.S. Census Bureau, there were over 31 million teenagers in the United States in
2000 and the number is expected to grow to approximately 34 million by 2005.
Management believes that teenagers represent both a growing part of the U.S.
population and an increasing source of purchasing power.

The Company was incorporated in Texas in 1982. Its executive offices are
located at 4121 International Parkway, Carrollton, Texas 75007, and its
telephone number is (972) 307-5555.

BUSINESS STRATEGY

The Company is a leading retailer of brand name casual apparel and related
accessories for teenagers. The principal elements of the Company's business
strategy in its Gadzooks stores are:

o Focus on Both Male and Female Teenage Customers. The Gadzooks' concept
focuses on providing fashionable casual apparel and accessories to both
male and female teenage customers. By offering merchandise for both sexes,
Gadzooks believes that it serves a broader customer base than some of its
specialty store competitors, thereby reducing the potential fashion risk of
concentrating on one gender exclusively.

o Multiple Merchandise Categories. A key component of the Company's
merchandising strategy is to reduce its dependence on any one fashion,
style, brand or item by offering products in a broad range of categories.
Each Gadzooks store carries approximately 2,400 stock-keeping units or
"SKUs" (excluding different sizes of the same item), including woven and
knit tops, jeans, shorts, junior dresses, swimwear, t-shirts, footwear,
sunglasses, watches, jewelry and other accessory items. The Company
regularly monitors store sales by classification, style, vendor and size to
identify emerging fashion trends, and manages the product mix in its stores
to respond to the spending patterns of its customers. The Company believes
that its success to date has been largely attributable to its ability to
meet the changing fashion preferences of its customers.

o Emphasis on Brand Name Merchandise Supplemented by Private Brands.
Another key feature of the Company's merchandising strategy is to offer a
wide variety of popular brand name merchandise based on its belief that its
customers shop primarily for recognized labels and designs. The Company's
merchandise includes high visibility names such as ECKO, Billabong, Fox,
Puma, Candie's, Hurley and others. The Company is continuing to grow its
private brand business in order to better meet the needs of its customers.
Private brands allow the Company the opportunity to expand its customer
base by providing merchandise of comparable quality to brand name
merchandise at competitive prices and to capitalize on fashion trends when
branded vendors are not offering the latest in trends. The Company
concentrates on merchandise that appeals to the mainstream teenager, rather
than relying on "cutting edge" products. The Company believes that this
strategy is consistent with its philosophy of responding to its customers'
fashion preferences as opposed to establishing fashion trends.

2

o Metropolitan and Middle Market Locations. A central aspect of the
Company's strategy has been the development of a store concept that is
successful in both metropolitan and middle markets. The Company believes
that teenagers throughout the United States frequently have similar fashion
preferences as a result of the influence of television programs, sports,
MTV and music and fashion magazines. As a result, the Company has been able
to operate stores successfully across a broad range of demographic and
geographic markets, increasing the number of potential sites available to
the Company.

o Attentive Customer Service. The Company is committed to offering
professional and attentive customer service. Gadzooks hires young,
energetic, service-oriented sales associates who understand teenagers and
can relate to their changing needs and preferences. The Company strives to
give its teenage customers the same level of respect and attention that is
generally given to adult customers at other retail stores. The Company
trains sales associates to greet each customer personally, to inform the
customer about new fashion trends and to suggest merchandise to suit the
customer's wardrobe and lifestyle needs. The Company believes that the high
level of service given to its teenage customers differentiates Gadzooks
from its competition.

o Entertaining Store Environment. The Company believes that its stores
are visually appealing and provide a fun and enjoyable shopping experience
for its customers. Gadzooks' stores are designed to create a high energy,
fun environment using television monitors featuring popular music videos
and creative, eye-catching signage. The Company's signature Volkswagen
Beetle is a feature attraction in the stores. The Company believes that its
entertaining store design encourages customers to visit the stores more
frequently and to shop in the stores for longer periods of time. While
Gadzooks' stores are designed to appeal primarily to the teenage customer,
the Company also strives to create a shopping environment that is
comfortable for adults.

o Investment in Systems and Personnel. The Company is committed to
investing in information systems and using current technology to help
execute its merchandising strategy. The Company's systems provide its
buyers and merchandise planners with daily sales and inventory information
by store, style, vendor and size, allowing Gadzooks to respond to changing
customer preferences and to stock the appropriate quantities and styles of
merchandise at each store. The Company is also committed to attracting and
retaining highly qualified, service-oriented management and sales
associates and providing them with career advancement opportunities. The
corporate culture at Gadzooks promotes the open exchange of new ideas and
information between all levels of the Company, thereby enabling management
to supplement the data from its information systems with the practical
experience of its employees.

o Distribution Capabilities. The Company believes that its 207,000
square-foot facility in the Dallas area can support the merchandising needs
of more than 600 stores, providing for the Company's continued store
expansion for the next few years. The Company believes the distribution
center is a critical element in its future growth plans.

3

STORE LOCATIONS

As of April 5, 2002, the Company operated 434 Gadzooks stores in 40 states.
The Company's existing Gadzooks stores are located in metropolitan markets such
as Dallas, Chicago, Atlanta, Boston and Kansas City, as well as middle markets
such as Amarillo, Texas; Tupelo, Mississippi; and Roanoke, Virginia. The
following lists the Gadzooks stores by city and state.

ALABAMA ILLINOIS MARYLAND NEW MEXICO PENNSYLVANIA TEXAS - CONT.
- ------- -------- -------- ---------- ------------ -------------
Huntsville Bloomington Baltimore(5) Albuquerque(2) Altoona Port Arthur
Mobile Carbondale Frederick Las Cruces Chambersburg San Angelo
Montgomery Champaign Hagerstown Santa Fe Erie San Antonio(5)
Oxford Chicago(13) Harrisburg(2) Sherman
Fairview Heights/ MASSACHUSETTS NEW YORK Indiana Temple
St.Louis ------------- -------- Johnstown Texarkana
ARIZONA Moline Boston(6) Albany(2) Lancaster Tyler
- ------- Peoria Lakewood Muncy Victoria
Phoenix Rockford MICHIGAN Massapequa Philadelphia(2) Waco
Springfield -------- Rochester(3) Pittsburgh(8) Wichita Falls
ARKANSAS Ann Arbor Syracuse(2) Pottstown
- -------- Battle Creek Scranton
Fayetteville Detroit(5) Selinsgrove UTAH
Fort Smith INDIANA Flint NORTH CAROLINA State College -----
Jonesboro ------- Grand Rapids(2) -------------- Wilkes-Barre Salt Lake City(3)
Little Rock(2) Bloomington Holland Asheville
Elkhart Jackson Cary
Evansville Lansing Charlotte(2)
COLORADO Fort Wayne Monroe Concord RHODE ISLAND VIRGINIA
- -------- Indianapolis(2) Muskegon Fayetteville ------------ --------
Denver(3) Lafayette Port Huron Greensboro Providence Charlottesville
Grand Junction Merrillville Portage Greenville Chesapeake
Muncie Saginaw Hickory Christiansburg
DELAWARE South Bend Traverse City High Point SOUTH CAROLINA Danville
- -------- Terre Haute Jacksonville -------------- Fredericksburg
Dover Raleigh-Durham(2) Charleston(2) Harrisonburg
Newark Wilmington Columbia(2) Lynchburg
Winston-Salem Florence Newport News
FLORIDA IOWA Greenville Norfolk
- ------- ---- MINNESOTA Myrtle Beach Roanoke
Boca Raton Ames --------- Spartanburg Virginia Beach
Boynton Beach Cedar Falls Duluth Washington, DC(3)
Daytona Beach Cedar Rapids(2) Mankato Winchester
Fort Lauderdale(3) Council Bluffs Minneapolis/ NORTH DAKOTA
Fort Myers Davenport St. Paul(7) ------------ SOUTH DAKOTA
Fort Walton Beach Des Moines(3) St. Cloud Fargo ------------
Gainesville Dubuque Minot Rapid City WASHINGTON
Jacksonville(3) Fort Dodge MISSISSIPPI Sioux Falls ----------
Jensen Beach Iowa City ----------- OHIO Seattle(2)
Lakeland Sioux City Biloxi ---- TENNESSEE
Melbourne Waterloo Hattiesburg Akron --------- WEST VIRGINIA
Merritt Island Jackson Canton Chattanooga(2) -------------
Miami Meridian Cincinnati(2) Clarksville Bluefield
Naples Tupelo Cleveland(5) Jackson Bridgeport
Orlando(6) KANSAS Columbus(2) Johnson City Charleston
Panama City ------ MISSOURI Dayton(2) Kingsport Huntington
Pensacola Hays -------- Findlay Knoxville(2) Morgantown
Port Charlotte Hutchinson Cape Girardeau Heath Memphis(3) Mount Hope
Port Richey Kansas City Columbia Lancaster Nashville(3) Parkersburg
Sarasota Manhattan Jefferson City Lima
Tallahassee(2) Salina Joplin Mansfield TEXAS WISCONSIN
Tampa(7) Topeka Kansas City(3) Marion ----- ---------
Vero Beach Wichita(2) Springfield New Philadelphia Abilene Appleton
West Palm Beach(2) St. Joseph Piqua Amarillo Eau Claire
KENTUCKY St. Louis(4) Sandusky Austin(3) Green Bay
------- St. Clairsville Beaumont LaCrosse
Ashland NEBRASKA Toledo Brownsville Madison(2)
Bowling Green -------- Youngstown/Niles(2) College Station Milwaukee(3)
GEORGIA Elizabethtown Grand Island Zanesville Corpus Christi Wausau
- ------- Florence/Cincinnati Lincoln Dallas/
Athens Lexington Omaha(2) Fort Worth(11)
Atlanta(9) Louisville(2) Denton
Augusta Owensboro NEW HAMPSHIRE OKLAHOMA El Paso(2)
Macon Paducah ------------- -------- Harlingen
Rome Manchester Bartlesville Houston(11)
Savannah Salem Enid Killeen
Valdosta LOUISIANA Lawton Laredo
--------- NEW JERSEY Muskogee Longview
IDAHO Alexandria ---------- Norman Lubbock
- ----- Baton Rouge(2) Cherry Hill/ Oklahoma City(4) Lufkin
Boise Houma Philadelphia Shawnee McAllen
Lafayette Deptford/Philadelphia Tulsa(3) Midland/Odessa(2)
Lake Charles Eatontown
Monroe Freehold
New Orleans(3) Livingston
Shreveport/Bossier City Mays Landing
Phillipsburg
Wayne

4

As of April 5, 2002, the Company operated four Orchid stores in two states. The
stores are located as follows: Houston, Texas (2), Dallas, Texas and New
Orleans, Louisiana.

EXPANSION STRATEGY

The following table provides a history of the Gadzooks store expansion
program over the past five fiscal years.

The Company's expansion strategy for fiscal 2002 is to continue to open
stores in enclosed shopping malls in both metropolitan and middle markets. The
Company expects to open approximately 12 new Gadzooks stores during fiscal 2002,
seven of which have been opened as of April 5, 2002. The Company believes that
the broad appeal of the Gadzooks' concept enables it to operate successfully in
diverse geographic and demographic markets, thereby increasing the total number
of potential sites available to the Company.

The Company typically expands from existing markets into contiguous new
markets and attempts to cluster its stores within a market area in order to
achieve management and operating efficiencies and to enhance its name
recognition. In fiscal 2001, the Company opened its first store on the west
coast with several new stores in the state of Washington. In fiscal 2002, the
Company will open its first store in the state of Oregon. The Company closed
four under-performing stores during fiscal 2001 and analyzes stores for
potential closing from time to time.

The Company has, from time to time, analyzed potential acquisitions of
small chains of stores that serve its target customer in order to provide the
Company with more rapid access to desirable locations and new markets. The
Company may consider such acquisitions again in the future. Except for a limited
number of stores acquired from former franchisees, the Company has never made
any such acquisitions and does not currently have agreements in place for any in
the future.

5

MERCHANDISING

The Company's merchandising strategy at its Gadzooks stores is to provide a
wide range of brand name casual apparel and related accessories that reflect the
fashion preferences of young men and women principally between the ages of 14
and 18. Each store typically carries an inventory of approximately 2,400 SKUs.

The Company's merchandise includes highly visible names such as ECKO,
Billabong, Fox, Puma, Candie's, Hurley and others. The Company concentrates on
merchandise that appeals to the mainstream teenager rather than relying on
"cutting edge" products. The Company believes that this strategy is consistent
with its philosophy of responding to its customers' fashion preferences as
opposed to establishing fashion trends.

The Company classifies all of its merchandise into one of the following
five categories:

o Juniors: The Juniors category includes
casual sportswear separates
designed for fashion-current
teenage girls, such as knit tops,
woven shirts and vests, denim,
dresses and swimwear. Key brands
in this category include Candie's,
DKNY Jeans, L.E.I., Bongo and Mudd.

o Young Mens: The Young Mens category
includes casual sportswear
separates reflecting current
fashion trends, such as woven and
knit tops and bottoms made of denim
and other fabrics. Key brands in
this category include ECKO,
Billabong, Fox, Hurley and Puma.

o Accessories: The Accessories category includes
a variety of male, female and
unisex accessories including
sunglasses, watches, wallets,
hair accessories, backpacks,
necklaces, hats and other
accessories. Key brands in this
category include ECKO, Fossil,
Fox and Candie's.

o Unisex t-shirts: The Unisex category consists of
t-shirts with logos containing
current topics and humorous
designs and phrases. This category
includes merchandise from various
vendors, as well as a small
selection of Company-designed
products.

o Footwear: The Company offers a limited
selection of male, female and
unisex footwear including
sandals and active footwear. Key
brands in this category include
Candie's, Dr. Marten, Vans, Puma
and ECKO.

The following table sets forth the Company's merchandise sales by category
as an approximate percentage of total net sales:

6

By offering products in multiple categories, the Company is able to shift
its merchandise emphasis among and within its core categories to respond to
changing customer preferences. The Company expects to continue to adjust its
emphasis in particular categories in response to changing fashion trends and,
therefore, its merchandise mix may vary slightly from time to time.

The Company continues to supplement its national and teen branded
merchandise with private brand offerings in order to better meet the needs of
its customers. Private brands allow the Company the opportunity to expand its
customer base by providing merchandise of comparable quality to brand name
merchandise at competitive prices and to capitalize on fashion trends when
branded merchandise vendors are not offering the latest in trends. The private
brand merchandise is designed internally by the Company's product design team
and buying staff. This merchandise is sourced domestically to allow the buying
staff to react quickly to developing trends. Private brand sales, including
merchandise designed and sourced by Gadzooks under the Candie's label, accounted
for approximately 13 percent and 6 percent of the Company's sales in fiscal 2001
and fiscal 2000, respectively.

In an effort to keep the stores fresh and exciting, the Company's visual
merchandising department, in conjunction with the marketing and buying staff,
provides specific floor sets and merchandising ideas to the stores and regularly
instructs district and store managers on the creative display of merchandise.
The merchandise presentation in the stores is significantly changed four times
each year to highlight specific merchandise for each of the Company's spring,
summer, back-to-school and holiday selling seasons and to maintain a current
look. In addition, the Company maintains a constant flow of new merchandise to
the stores through shipments from its distribution center on a daily basis to
encourage customers to frequently visit its stores. To reduce the risk
associated with the introduction of new products, the Company tests certain
products in selected stores before determining if it will purchase the product
for a broader group of stores.

PURCHASING

The Company's purchasing staff consists of a chief merchandising officer,
divisional merchandising managers, buyers and assistant buyers. The purchasing
staff analyze current fashion directions by visiting major fashion markets,
maintaining close relationships with the Company's vendors and utilizing focus
groups in order to identify styles and trends. In addition, the Company's buyers
attend concerts and other events attended by teenagers. The chief merchandising
officer, divisional merchandising managers and the buyers regularly monitor
merchandise flow through the stores and strive to maintain the appropriate
merchandise mix to meet customer demand.

Due to changes in fashion trends and seasonality, the Company purchases
merchandise from numerous vendors throughout the year. During fiscal 2001, the
Company did business with approximately 600 vendors. No single vendor accounted
for more than 10% of merchandise purchases. Gadzooks believes that strong vendor
relationships are important to the growth and success of the Company.

In addition, the Company uses private label merchandise to supplement its
primarily branded product line. Bad Kitty and Misdemeanor are the private label
brands established for the junior's category, and Epidemic, Decibel and Verbal
Assault have been established for the young men's category.

PLANNING AND ALLOCATION

The Company continually strives to improve its merchandising, distribution,
planning and allocation methods to manage its inventory more productively. The
Company's planning and allocation staff work closely with the buyers to
determine the correct inventory levels for all stores and merchandise
categories. The Company divides its stores into different categories based upon,
among other things, geographic location, demographics, sales volume, competition
and store capacity. Merchandise allocation is based in part on sales and
inventory analysis of the stores by category. Information from the Company's
point-of-sale computer system is regularly reviewed and analyzed to assist in
making merchandise allocation and markdown decisions.

In May 1997, the Company relocated its headquarters to a 207,000 square
foot site in the Dallas metropolitan area, which includes a distribution
facility and the Company's corporate offices. Vendors deliver merchandise to

7

this facility, where it is inspected, entered into the Company's computer
system, ticketed (to the extent that it was not pre-ticketed by the vendor),
allocated to stores and boxed for distribution to the Company's stores.
Merchandise is typically shipped to stores daily, providing Gadzooks' stores
with a steady flow of new merchandise. For certain key products, the Company
maintains a backstock at its distribution center that is allocated and
distributed to the stores through an automated replenishment system.

STORE OPERATIONS

Gadzooks stores are open seven days a week during normal mall hours. The
Company's store operations are managed by a vice president of store operations,
regional sales directors and district sales managers, who generally have
responsibility for seven to nine stores within a geographic district. Individual
stores are managed by a store manager and two assistant store managers. A
typical store has 6 to 12 part-time sales associates, depending on the season.
Gadzooks compensates its district and store managers with a base salary and
performance bonuses, based on store sales and shrink results. In addition, stock
options are granted to district sales managers and above after their first year
of service, with additional grants each year thereafter. Sales associates are
compensated on an hourly basis.

The Company believes that its continued success is dependent in part on its
ability to attract, retain and motivate quality employees. In particular, the
success of the Company's store expansion program will be dependent on its
ability to promote and/or recruit qualified district and store management. The
Company has an established training program for future district sales managers.
Store managers, many of whom are selected from among the Company's assistant
managers, currently complete a one-week training program with a designated
training store manager before taking responsibility for a store. A formalized
one-week training program for assistant managers has been rolled out to the
stores in fiscal 2002. The hiring and training of new sales associates and
assistant managers are the responsibility of store managers, and the Company has
established training and operations manuals to assist them in this process.

Management considers its employees' knowledge of the Company's customers
and merchandise to be significant to its marketing approach and customer
satisfaction. While all Gadzooks store employees are responsible for the general
appearance of the store and merchandise presentation, the Company's major
emphasis in training its store employees is to give priority to customer service
and assistance. Sales associates regularly act as greeters, meeting customers as
they enter the store and offering assistance. The Company trains its sales
associates to inform the customer about new fashion trends and to suggest
merchandise that suits the customer's wardrobe and lifestyle needs. The Company
monitors customer service at the store level through various programs, including
unannounced visits to the stores by store operations personnel and by regularly
reviewing and responding to customer feedback.

STORE ENVIRONMENT

The Company believes that its stores are visually appealing and provide a
fun and enjoyable shopping experience for its customers. Gadzooks stores are
designed to create a high energy, fun environment using television monitors
featuring popular music videos and creative, eye-catching signage. A standard
feature in all stores is the Company's signature Volkswagen Beetle. The Company
typically displays a significant amount of merchandise on the walls of the
store, with male merchandise along one side and female merchandise along the
other. In the center of the store, lower fixtures are used to display
merchandise in order to maintain an open feeling. Stores typically feature large
windows along the mall which provide an open view of the entire store to mall
traffic and are merchandised to draw customers into the store. While Gadzooks
stores are designed to appeal primarily to the teenage customer, the Company
also strives to create a shopping environment that is comfortable for adults.

SITE SELECTION

Based on its results to date in both metropolitan and middle markets, the
Company believes that it can operate successfully in markets with a broad range
of geographic and demographic profiles. The Company takes into account certain
demographic factors such as population density, concentration of teenagers,
income levels, lifestyle characteristics and the performance of other retailers
to identify attractive new markets, evaluate specific shopping malls and project
individual store sales volumes.

8

Within each shopping mall, the Company typically seeks a highly visible
location and often locates its stores near major fashion-oriented department
stores, food courts and other specialty stores catering to teenage customers.
The Company's existing stores average approximately 2,500 square feet. The
Company typically seeks a location of approximately 2,400 to 3,100 square feet
with significant mall frontage. However, the Company's flexible store design
enables it to take advantage of well-situated sites with more unique layouts.
Once a site is approved, the Company, with the assistance of an outside
architect, designs the store to meet the specific site characteristics. The
Company's construction department seeks competitive bids from outside
contractors for the build-out of each store and oversees the construction
process. The Company typically requires six to eight weeks to open a new store
after construction begins.

MANAGEMENT INFORMATION SYSTEMS

Each Gadzooks store is linked to the Company's headquarters through a
point-of-sale system that interfaces with an IBM RS6000 computer equipped with
an integrated merchandising, distribution and accounting software package. The
Company's point-of-sale computer system has several features, including
merchandise scanning, "price look-up," updated sales reports and on-line credit
card approval. These features improve transaction accuracy, speed and checkout
time, increase overall store efficiency and enable the Company to track the
productivity of individual sales associates.

The Company's management information and control systems enable the
Company's corporate headquarters personnel to promptly identify sales trends,
replenish depleted store inventories, reprice merchandise and monitor
merchandise mix and inventory shrinkage at individual stores and throughout the
Company's store network. Management believes that these systems provide a number
of benefits, including improved store inventory management, better in-stock
availability, higher operating efficiency and fewer markdowns.

The Company believes that its current management information and control
systems are adequate to support the Company's planned expansion, but regularly
evaluates its systems to determine when upgrades or replacements are needed. In
1999, the Company significantly upgraded its information technology
infrastructure network to support many ongoing initiatives. The Company
implemented enhanced planning and allocation systems in fiscal 2000 and fully
integrated the planning system with the planning process in the beginning of
fiscal 2002. These changes allow the Company to more efficiently manage and
respond to merchandise mix changes at a chain and store level. The Company
implemented a new financial system that was fully operational by the end of the
third quarter of fiscal 2001. Additionally, the Company has signed a contract to
license new point-of-sale, merchandising and distribution systems to be
installed and implemented over the course of the next five years.

ADVERTISING AND PROMOTION

The Company relies primarily on mall traffic, the enthusiasm of its sales
associates and existing customers, highly visible store locations and
eye-catching signage to attract new customers to the stores. The Company has
generally found this approach to be more cost effective than more traditional
media advertising. During fiscal 2001, the Company began building an e-mail
database of customers. The database is used to advertise and promote merchandise
offerings and contests via e-mail blasts as a means to increase customer traffic
at the stores. The Company plans the opening of new stores to coincide with peak
shopping seasons and mall grand openings when customer traffic is greater. The
Company also uses promotions to generate repeat visits to its stores and plans
on increasing its advertisements in national magazines, such as Seventeen, Spin
and Teen People, in partnership with certain of its vendors. The Company also
benefits from advertising by its vendors, especially where Gadzooks is listed as
a retailer of their products. The Company's redesigned website features music
videos, movie previews, horoscopes, current store fashions and promotions to
capture the attention of teenagers and attract them to the stores. The Company
has also been active in sponsoring concerts and other teen-related promotional
events.

9

TRADEMARKS

The Company has registered on the Principal Register of the United States
Patent and Trademark Office "Gadzooks" (in various formats) and "Gaditude" and
currently has pending registrations for "Bad Kitty," "Decibel," "Epidemic,"
"Misdemeanor," "Orchid" and "Verbal Assault." Each federal registration is
renewable indefinitely if the mark is in use at the time of the renewal. The
Company is not aware of any claims of infringement or other challenges to the
Company's right to use its marks in the United States.

COMPETITION

The teenage retail apparel and accessories industry is highly competitive.
The Company competes with other retailers for customers, suitable retail
locations and qualified management personnel. Gadzooks currently competes with
traditional department stores, with national specialty chains such as Old Navy
and certain divisions of The Limited, with numerous other teen retailers such as
American Eagle Outfitters, The Buckle, Abercrombie & Fitch, Pacific Sunwear, Wet
Seal and Hot Topic, and with local specialty stores in certain markets, and to a
lesser extent, with mass merchandisers and companies providing shopping sites
via the internet. Many of the Company's competitors are larger and have
substantially greater financial, marketing and other resources than the Company.
The principal competitive factors in the Company's business are fashion,
merchandise selection, customer service, price and store location.

EMPLOYEES

On February 28, 2002, the Company had 1,527 full-time employees and 3,150
part-time employees. Of the Company's 4,677 employees, 148 were corporate
personnel, 105 were distribution center employees and 4,424 were store
employees. The number of part-time employees varies with seasonal needs. None of
the Company's employees are covered by a collective bargaining agreement. The
Company seeks to create a casual and supportive working environment and believes
its employee relations to be excellent.

10

RISK FACTORS

This Report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21F of the Securities
Exchange Act of 1934. When used in this report, words such as "anticipate,"
"believe," "estimate," "expect," "intend," "predict," "project," and similar
expressions, as they relate to us or our management, identify forward-looking
statements. These forward-looking statements are based on information currently
available to our management. Actual results could differ materially from those
contemplated by the forward-looking statements as a result of certain factors,
including fluctuations in store sales results, changes in economic conditions,
fluctuations in quarterly results and other factors described under the "Risk
Factors" section. Such statements reflect the current views of our management
with respect to future events and are subject to these and other risks,
uncertainties and assumptions relating to our operations, results of operations,
growth strategy and liquidity. All subsequent written and oral forward-looking
statements attributable to us, or persons acting on our behalf, are expressly
qualified in their entirety by this paragraph.

GROWTH STRATEGY: FUTURE OPERATING RESULTS

The Company's net sales have grown significantly during the past several
years, primarily as a result of the opening of new stores and, to a lesser
extent, increases in comparable store sales. The Company intends to continue its
growth strategy by opening new stores for the foreseeable future, and its future
operating results will depend, to a certain degree, upon its ability to open and
operate new stores successfully and to manage a larger business profitably. The
Company anticipates opening approximately 12 new Gadzooks stores during fiscal
2002. The Company is still evaluating the Orchid concept and could open one more
new store this year as part of the evaluation process. In the future, the
Company may enter new markets in various regions of the United States. Expansion
into new markets may present competitive and merchandising challenges that are
different from those currently encountered by the Company in its existing
markets. As an additional part of its growth strategy, the Company has
occasionally analyzed the acquisition of other retailers that serve the
Company's target customers and may consider such acquisitions again in the
future. Except for a limited number of stores acquired from former franchisees,
the Company has never made any such acquisitions and does not currently have
agreements in place for any in the future. There can be no assurance that the
operations of any acquired entities could be successfully integrated with the
Company's existing operations or that the combined business would be profitable.

The Company is subject to a variety of business risks generally associated
with rapidly growing companies. The Company's ability to open new stores will
depend upon many factors, including, among others, the ability to identify and
enter new markets, locate suitable store sites, negotiate acceptable lease
terms, hire and train store managers and sales associates and obtain adequate
capital resources on acceptable terms. There can be no assurance that the
Company will be able to integrate successfully new stores into its operations or
that new stores will achieve sales and profitability levels comparable to the
Company's existing stores. In addition, there can be no assurance that the
Company's expansion within its existing markets will not adversely affect the
individual financial performance of the Company's existing stores or its overall
results of operations. Furthermore, the Company will need to continually
evaluate the adequacy of its store management and management information and
distribution systems to manage its planned expansion. There can be no assurance
that the Company will anticipate all of the changing demands that its expanding
operations will impose on such systems and facilities, and the failure to adapt
its systems, facilities and procedures could have a material adverse effect on
the Company's business. There can be no assurance that the Company will
successfully achieve its planned expansion or, if achieved, that the expansion
will result in profitable operations. See "Business -- Store Locations" and
"Business -- Expansion Strategy."

The Company anticipates capital expenditures of $8 million to $10 million
in fiscal 2002 to open 12 new Gadzooks stores, remodel one existing store,
update the look of selected existing stores and purchase and/or upgrade
information systems. The Company has hired a consultant to review the current
store base and provide recommendations on ways to update the look of more mature
stores. Further, the consultant will develop a plan to increase the visual
appeal, flow and shop-ability of all stores. The actual costs that the Company
will incur in connection with opening new stores cannot be predicted with
precision because such costs will vary based upon, among other things,
geographic location, store size and the extent of the build-out required at the
selected site. The Company believes that its existing cash balances, cash
generated from operations and funds available under the Company's revolving line
of credit will be sufficient to fund its expansion requirements through at least
fiscal 2002. The Company cannot give assurance that it will not be required to
seek additional sources of funds for such expansion.

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FLUCTUATIONS IN COMPARABLE STORE SALES RESULTS

A variety of factors affect the Company's comparable store sales results,
including economic conditions, fashion trends, the retail sales environment,
sourcing and distribution of products and the Company's ability to execute its
business strategy efficiently. The Company's quarterly comparable store sales
results have varied significantly in the past. The Company's comparable store
sales results were 17.1%, 5.7%, 9.3% and 1.7% in the first, second, third and
fourth quarters of fiscal 2000, respectively, and (4.6)%, (8.9)%, (3.2)% and
(3.9)% in the first, second, third and fourth quarters of fiscal 2001,
respectively.

CHANGES IN FASHION TRENDS

The Company's profitability is largely dependent upon its ability to
anticipate the fashion tastes of its customers and to provide merchandise and
brands that appeals to their preferences in a timely manner. The fashion tastes
of the Company's customers may change frequently. The Company's failure to
anticipate, identify or react appropriately to changes in styles, trends or
brand preferences could lead to, among other things, excess inventories and
higher markdowns, which could have a material adverse effect on the Company's
operating results, comparable store sales results and image with its customers.
See Item 1, "Business -- Merchandising."

PRIVATE LABEL MERCHANDISE

Sales from private label merchandise, including merchandise designed and
sourced by Gadzooks under the Candie's label, accounted for approximately 13%
and 6% of net sales in fiscal 2001 and fiscal 2000, respectively. The Company
expects to increase the percentage of net sales in private label merchandise in
the future, although there can be no assurance that the Company will be able to
achieve increases in private label merchandise sales as a percentage of net
sales. Because the Company's private label merchandise generally carries higher
merchandise margins than its other merchandise, the Company's failure to
anticipate, identify and react in a timely manner to fashion trends with its
private label merchandise, particularly if the percentage of net sales derived
from private label merchandise increases, may have a material adverse affect on
the Company's business, financial condition and results of operations. See Item
1, "Business - Merchandising."

IMPACT OF ECONOMIC CONDITIONS

Certain economic conditions affect the level of consumer spending on
merchandise offered by the Company, including business conditions, interest
rates, taxation and consumer confidence in future economic conditions. If the
demand for apparel and related merchandise by teenagers declines, the Company's
business, comparable store sales results and results of operations would be
materially and adversely affected. Although the Company advertises on its
website, through e-mail blasts and in national magazines to a limited extent
through cooperative agreements with certain of its vendors, its stores rely
principally on mall traffic for customers. Therefore, the Company is dependent
upon the continued popularity of malls as a shopping destination and the ability
of mall anchor tenants and other attractions to generate customer traffic for
its stores. A decrease in mall traffic or a decline in economic conditions in
the markets in which the Company's stores are located would adversely affect the
Company's growth, net sales, comparable store sales results and profitability.
See Item 1, "Business."

DEPENDENCE ON SINGLE DISTRIBUTION FACILITY

The Company's distribution functions for all its stores are handled from a
single facility in Carrollton, Texas. Any significant interruption in the
operation of the distribution facility due to natural disasters, accidents,
system failures or other unforeseen causes could have a material adverse effect
on the Company's business, financial condition and results of operations. There
can be no assurance that the Company's distribution center will be adequate to
support the Company's anticipated future growth.

12

QUARTERLY RESULTS AND SEASONALITY

The Company's quarterly results of operations may fluctuate materially
depending on, among other things, the timing of new store openings, net sales
contributed by new stores, increases or decreases in comparable store sales,
shifts in timing of certain holidays and changes in the Company's merchandise
mix. The Company's business is also subject to seasonal influences, with heavier
concentrations of sales during the Christmas holiday, back-to-school and spring
break seasons. The Company has experienced quarterly losses in the past and may
experience such losses in the future. Because of these fluctuations in net sales
and net income, the results of operations of any quarter are not necessarily
indicative of the results that may be achieved for a full fiscal year or any
future quarter.

ECONOMIC IMPACT OF RECENT TERRORIST ATTACKS

As a result of the attacks on September 11, 2001, security has been
heightened in public areas, including the regional shopping malls where the
Company's stores are located. Any further threat of terrorist attacks or actual
terrorist events could lead to lower customer traffic in regional shopping
malls. The decline in tourism has also had a negative impact on stores located
in Florida. A continued decline in tourism in this market could have a material
effect on the Company's sales and profitability. In addition, local authorities
or mall management could close regional shopping malls in response to any
immediate security concern. For example, on September 11, 2001, substantially
all the Company's stores were closed early due to closure of the malls in
response to the terrorist attacks. Mall closures, as well as lower customer
traffic due to security concerns, could result in decreased sales that would
have a material adverse effect on the Company's business, financial condition
and results of operations.

DEPENDENCE ON KEY VENDORS

The Company's business depends on its ability to purchase current season,
brand name apparel in sufficient quantities at competitive prices. The inability
or failure of key vendors to supply the Company with adequate quantities of
desired merchandise, the loss of one or more key vendors or a material change in
the Company's current purchase terms could have a material adverse effect on the
Company's business. Many of the Company's smaller vendors have limited
resources, production capacities and operating histories, and many have limited
the distribution of their merchandise in the past. The Company has no long-term
purchase contracts or other contractual assurances of continued supply, pricing
or access to new products. There can be no assurance that the Company will be
able to acquire desired merchandise in sufficient quantities on terms acceptable
to the Company in the future. During the Company's 2001 fiscal year, no single
vendor accounted for more than 10% of the Company's merchandise purchases. See
Item 1, "Business -- Merchandising" and "Business -- Purchasing."

DEPENDENCE ON KEY PERSONNEL

The Company's success depends largely on the efforts and abilities of
senior management. The loss of the services of any member of senior management
could have a material adverse effect on the Company's business, financial
condition and results of operations. There can be no assurance that the
Company's existing management team will be able to manage the Company or its
growth or that the Company will be able to retain current and attract additional
qualified personnel as needed in the future.

COMPETITION

The Company operates in a highly competitive environment, which has
experienced aggressive growth in the number of competitors, the number of stores
and the amount of square footage dedicated specifically to teen retailing. In a
study conducted by Bear, Stearns & Co. Inc. of seventeen teen-oriented retail
companies, "the number of stores per million teenagers rose 11.8% between 1995
and 2000, while square footage per youth climbed 13%". The Company currently
competes with traditional and department stores, with national specialty chains
such as Old Navy and certain divisions of The Limited, with numerous other teen
retailers, such as American Eagle Outfitters, The Buckle, Abercrombie & Fitch,
Pacific Sunwear, Wet Seal and Hot Topic, with smaller chains and local specialty
stores, and to a lesser extent, with mass merchandisers and companies providing
shopping sites via the internet. Many of these competitors are larger and have
substantially greater resources than the Company. Direct competition with these
and other retailers may increase significantly in the

13

future, which could require the Company, among other things, to lower its prices
and/or increase its advertising expenses. Increased competition could have a
material adverse effect on the Company's operations and comparable store sales
results. See Item 1, "Business -- Competition."

STOCK PRICE VOLATILITY

The market price of the Company's Common Stock has fluctuated substantially
since the Company's initial public offering in October 1995. The Company's
Common Stock is quoted on The Nasdaq Stock Market, which has experienced, and is
likely to experience in the future, significant price and volume fluctuations
which could adversely affect the market price of the Common Stock without regard
to the operating performance of the Company. In addition, the Company believes
that factors such as quarterly fluctuations in the financial results of the
Company, the Company's comparable store sales results, announcements by other
apparel retailers, the overall economy and the condition of the financial
markets could cause the price of the Company's Common Stock to fluctuate
substantially.

ANTI-TAKEOVER MATTERS

The Company's Restated Articles of Incorporation and its Bylaws contain
provisions that may have the effect of delaying, deterring or preventing a
takeover of the Company that shareholders may consider to be in their best
interests. The Company's Restated Articles of Incorporation and Bylaws provide
for a classified Board of Directors serving staggered terms of three years, the
prohibition of shareholder action by written consent in certain circumstances
and certain "fair price provisions." Additionally, the Board of Directors has
the authority to issue up to 1,000,000 shares of preferred stock having such
rights, preferences and privileges as designated by the Board of Directors
without shareholder approval.

The Company has a Shareholder Rights Plan, which is intended to deter an
unfriendly takeover of the Company and to help ensure that current shareholders
receive fair value upon the sale of their stock to another party seeking control
of the Company. See "Notes to Consolidated Financial Statements - Note 12
Shareholder Rights Plan," located on page 29 of the Registrant's 2001 Annual
Report to Shareholders, filed as Exhibit 13 to this Report. Such Notes to
Consolidated Financial Statements are incorporated herein by reference.

ITEM 2. PROPERTIES.

All of the existing stores are leased by the Company, with lease terms
(excluding renewal option periods exercisable by the Company at escalating
rents) expiring between June 2002 and July 2012. The leases for most of the
existing stores are for terms of ten years and provide for contingent rent based
upon a percent of sales in excess of specified minimums.

The Company leases its office and distribution center located in
Carrollton, Texas under a lease that is scheduled to expire on May 1, 2007.

ITEM 3. LEGAL PROCEEDINGS.

In the ordinary course of its business, the Company is periodically a party
to lawsuits. The Company does not believe that any resulting liability from
existing legal proceedings, individually or in the aggregate, will have a
material adverse effect on its operations or financial condition.

In the third quarter of fiscal 2001, the Company favorably settled a
lawsuit against another mall tenant that resulted in a gain of approximately
$740,000.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of the Company's shareholders during
the fourth quarter of the fiscal year covered by this report.

14

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The information in response to Item 5 is contained in the section entitled
"Corporate Information - Share Price Data" located on page 31 of the
registrant's 2001 Annual Report to Shareholders, filed as Exhibit 13 to this
Report. Such information is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA.

The selected financial and operating data in response to Item 6 is
contained in the section entitled "Selected Financial Data," located on page 9
of the registrant's 2001 Annual Report to Shareholders, filed as Exhibit 13 to
this Report. Such information is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

The information in response to Item 7 is contained in the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," located on pages 10 to 17 of the registrant's 2001 Annual Report to
Shareholders, filed as Exhibit 13 to this Report. Such information is
incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company does not engage in trading market risk sensitive instruments
and does not purchase as investments, as hedges, or for purposes "other than
trading," instruments that are likely to expose the Company to market risk,
whether it be from interest rate, foreign currency exchange, commodity price or
equity price risk. The Company has not issued any debt instruments, entered into
any forward or futures contracts, purchased any options or entered into any
swaps.

The Company's primary market risk exposure is that of interest rate risk. A
change in LIBOR or the Prime Rate as set by Wells Fargo Bank, would affect the
rate at which the Company could borrow funds under its credit facility.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information in response to Item 8 is contained in the registrant's 2001
Annual Report to Shareholders, filed as Exhibit 13 to this Report. Such
information is incorporated herein by reference. A cross-reference for location
of the requested information is below.

15

* The indicated pages of the Company's 2001 Annual Report to Shareholders are
filed as Exhibit 13 to this Report. Exhibit 13 is incorporated herein by
reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Information with respect to Item 10 is incorporated by reference from the
registrant's definitive proxy statement to be filed with the Commission not
later than 120 days after the end of the registrant's fiscal year.

ITEM 11. EXECUTIVE COMPENSATION.

Information with respect to Item 11 is incorporated by reference from the
registrant's definitive proxy statement to be filed with the Commission not
later than 120 days after the end of the registrant's fiscal year.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Information with respect to Item 12 is incorporated by reference from the
registrant's definitive proxy statement to be filed with the Commission not
later than 120 days after the end of the registrant's fiscal year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Information with respect to Item 13 is incorporated by reference from the
registrant's definitive proxy statement to be filed with the Commission not
later than 120 days after the end of the registrant's fiscal year.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) 1. The financial statements as cross-referenced in Item 8 of this
Report, together with the report thereon of PricewaterhouseCoopers LLP
dated March 7, 2002, appearing in the accompanying 2001 Annual Report
to Shareholders are incorporated by reference in this Report. With the
exception of the aforementioned information and information
incorporated in Items 5, 6 and 7, the 2001 Annual Report to
Shareholders is not deemed filed as part of this Report.

2. Financial statement schedules are omitted because they are not
applicable or the required information is shown in the financial
statements or notes thereto.

3. Exhibits included or incorporated herein:

See Exhibit Index.

(b) Reports on Form 8-K

There were no reports on Form 8-K filed during the last quarter of the
fiscal year covered by this report.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

GADZOOKS, INC.

Date: April 29, 2002 By /s/ Gerald R. Szczepanski
-------------------------------
Gerald R. Szczepanski
Chairman of the Board and
Chief Executive Officer

Each person whose signature appears below hereby authorizes Gerald R.
Szczepanski and James A. Motley, or either of them, as attorneys-in-fact to sign
on his behalf, individually, and in each capacity stated below and to file all
amendments and/or supplements to the Annual Report on Form 10-K.

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

17

INDEX TO EXHIBITS

18

10.9 -- Gadzooks, Inc. Employees' Savings Plan, as amended and revised
(filed as Exhibit 4.5 to the Company's Form S-8 (No. 333-68205)
filed with the Commission on December 1, 1998 and incorporated
herein by reference).

10.10 -- Severance Protection Agreement dated September 1, 1998 between
the Company and Gerald R. Szczepanski (filed as Exhibit 10.24 to
the Company's Quarterly Report on Form 10-Q filed with the
Commission on December 15, 1998 and incorporated herein by
reference).

10.11 -- Amendment No. 4 to the Gadzooks, Inc. 1992 Incentive and
Nonstatutory Stock Option Plan (filed as Exhibit 10.14 to the
Company's Amendment No. 3 to Form S-1 (No. 33-95090) filed with
the Commission on September 27, 1995 and incorporated herein by
reference).

10.12 -- Amendment No. 5 to the Gadzooks, Inc. 1992 Incentive and
Nonstatutory Stock Option Plan dated September 12, 1996 (filed as
Exhibit 10.13 to the Company's 1996 Annual Report on Form 10-K
filed with the Commission on April 23, 1997 and incorporated
herein by reference).

10.13 -- Amendment No. 1 to the 1994 Incentive and Nonstatutory Stock
Option Plan for Key Employees dated September 12, 1996 (filed as
Exhibit 10.14 to the Company's 1996 Annual Report on Form 10-K
filed with the Commission on April 23, 1997 and incorporated
herein by reference).

10.14 -- Gadzooks, Inc. Employee Stock Purchase Plan (filed as Exhibit 4.5
to the Company's Form S-8 (No. 333-50639) filed with the
Commission on April 21, 1998 and incorporated herein by
reference).

10.15 -- Lease Agreement between Gadzooks, Inc. (Lessee) and CB Midway
International, LTD. (Lessor) dated August 23, 1996 (filed as
Exhibit 10.17 to the Company's 1997 Annual Report on Form 10-K
filed with the Commission on April 27, 1998 and incorporated
herein by reference).

10.16 -- Gadzooks, Inc. 401(k) Plan and Profit Sharing Plan Adoption
Agreement (filed as Exhibit 10.18 to the Company's Quarterly
Report on Form 10-Q filed with the Commission on June 9, 1998, and
incorporated herein by reference).

10.17 -- Amendment No. 1 to the Credit Agreement between the Company and
Wells Fargo Bank (Texas), National Association, dated June 11,
1998 (filed as Exhibit 10.19 to the Company's Quarterly Report on
Form 10-Q filed with the Commission on September 15, 1998, and
incorporated herein by reference).

10.18 -- Amendment No. 2 to the Credit Agreement between the Company and
Wells Fargo Bank (Texas) National Association, dated May 14, 1999
(filed as Exhibit 10.20 to the Company's Quarterly Report on Form
10-Q filed with the Commission on June 15, 1999 and incorporated
herein by reference).

10.19 -- Amendment No. 6 to the Gadzooks, Inc. 1992 Incentive and
Nonstatutory Stock Option Plan dated June 18, 1998 (filed as
Exhibit 4.8 to the Company's Form S-8 (No. 333-60869) filed with
the Commission on August 7, 1998 and incorporated herein by
reference).

10.20 -- Amendment No. 1 to the Gadzooks, Inc. 1995 Non-Employee Director
Stock Option Plan dated June 18, 1998 (filed as Exhibit 4.10 to
the Company's Form S-8 (No. 333-60869) filed with the Commission
on August 7, 1998 and incorporated herein by reference).

10.21 -- Amendment No. 3 to the Credit Agreement between the Company and
Wells Fargo Bank (Texas) National Association dated June 1, 2000
(filed as Exhibit 10.24 to the Company's Quarterly Report on Form
10-Q filed with the Commission on June 13, 2000 and incorporated
herein by reference).

10.22 -- Management Services Agreement by and between Gadzooks Management,
L.P. and Gadzooks, Inc. dated June 28, 2000 (filed as Exhibit
10.25 in the Company's Quarterly Report on Form 10-Q filed with
the Commission on September 12, 2000 and incorporated herein by
reference).

19

10.23 -- Lease and Occupancy Agreement between Gadzooks, Inc. and Gadzooks
Management, L.P. dated June 28, 2000 (filed as Exhibit 10.26 to
the Company's Quarterly Report on Form 10-Q filed with the
Commission on September 12, 2000 and incorporated herein by
reference).

10.24 -- Amendment No. 7 to the Gadzooks, Inc. 1992 Incentive and
Nonstatutory Stock Option Plan dated as of March 30, 2000 (filed
as Exhibit 4.9 to the Company's Form S-8 (No. 333-48350) filed
with the Commission on October 20, 2000 and incorporated herein
by reference).

10.25 -- Amendment No. 8 to the Gadzooks, Inc. 1992 Incentive and
Nonstatutory Stock Option Plan dated as of March 30, 2000 (filed
as Exhibit 4.10 to the Company's Form S-8 (No. 333-48350) filed
with the Commission on October 20, 2000 and incorporated herein
by reference).

10.26 -- Amendment No. 1 to the Gadzooks, Inc. Employee Stock Purchase
Plan dated as of March 30, 2000 (filed as Exhibit 4.10 to the
Company's Form S-8 (No. 333-48350) filed with the Commission on
October 20, 2000 and incorporated herein by reference).

10.27 -- Amendment No. 4 to the Credit Agreement between the Company and
Wells Fargo Bank (Texas) National Association, dated June 1, 2001
(filed as Exhibit 10.28 to the Company's Quarterly Report on Form
10-Q filed with the Commission on June 18, 2001 and incorporated
herein by reference).

10.28 -- Executive Retirement Agreement between Gadzooks Management, L.P.
and Gerald R. Szczepanski dated July 31, 2001 (filed as Exhibit
10.29 to the Company's Quarterly Report on Form 10-Q filed with
the Commission on September 18, 2001 and incorporated herein by
reference).

10.29 -- First Amendment to the Severance Protection Agreement between
Gadzooks Management, L.P. and Gerald R. Szczepanski dated June 1,
2001 (filed as Exhibit 10.28 to the Company's Quarterly Report on
Form 10-Q filed with the Commission on December 18, 2001 and
incorporated herein by reference).

10.30 -- Severance Protection Agreement between Gadzooks Management,
L.P. and Paula Y. Masters dated July 1, 2001 (filed as Exhibit
10.29 to the Company's Quarterly Report on Form 10-Q filed with
the Commission on December 18, 2001 and incorporated herein by
reference).

10.31 -- Severance Protection Agreement between Gadzooks, Inc. and
James F. Wimpress, Jr. dated July 1, 2001 (filed as Exhibit 10.30
to the Company's Quarterly Report on Form 10-Q filed with the
Commission on December 18, 2001 and incorporated herein by
reference).

10.32 -- Severance Protection Agreement between Gadzooks Management,
L.P. and William S. Kotch, III dated July 1, 2001 (filed as
Exhibit 10.31 to the Company's Quarterly Report on Form 10-Q filed
with the Commission on December 18, 2001 and incorporated herein
by reference).

13* -- Pages 9-31 of the Company's 2001 Annual Report to Shareholders.

21 -- List of Subsidiaries (filed as Exhibit 21 to the Company's 2000
Annual Report on Form 10-K filed with the Commission on April 30,
2001 and incorporated herein by reference).

23* -- Consent of PricewaterhouseCoopers LLP.

24* -- Power of Attorney (included on signature page of this report).

- ----------

* Filed herewith (unless otherwise indicated, exhibits are previously filed).

20