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

                                    FORM 10-K
       [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                     For the fiscal year ended June 30, 2000
                                       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 1-9169

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

               New York                                   13-2807386
   (State or other jurisdiction of          (I.R.S. Employer Identification No.)
    incorporation or organization)

 530 Seventh Avenue, New York, New York                      10018
(Address of principal executive offices)                   (Zip Code)

               Registrant's telephone number, including area code
                                 (212) 354-1280

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

     Title of each class               Name of each exchange on which registered
     -------------------               -----------------------------------------
Common Stock, $0.01 par value                    New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None

     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 (Section 229.405 of this chapter) 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 the voting stock held by non-affiliates of
the registrant on September 22, 2000 was $4,707,000.

     Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.

      Date                          Class                   Shares Outstanding
      ----                          -----                   ------------------
September 22, 2000       Common Stock, $0.01 par value          27,215,907

<TABLE>
<CAPTION>
                                                           LOCATION IN FORM 10-K IN
         DOCUMENTS INCORPORATED BY REFERENCE                  WHICH INCORPORATED
         -----------------------------------                  ------------------
<S>                                                        <C>
Portions of registrant's Proxy Statement for the Annual            Part III
 Meeting of Stockholders to be held November 15, 2000.
</TABLE>

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PART I

ITEM 1. BUSINESS.

GENERAL

     Bernard Chaus, Inc. (the "Company" or "Chaus") designs, arranges for the
manufacture of and markets an extensive range of women's career and casual
sportswear principally under the JOSEPHINE CHAUS(R) COLLECTION, JOSEPHINE
CHAUS(R) STUDIO, JOSEPHINE CHAUS(R) ESSENTIALS and JOSEPHINE CHAUS(R) SPORT
trademarks. The Company's products are sold nationwide through department store
chains, specialty retailers and other retail outlets. The Company has positioned
its Chaus product line into the opening price points of the "better" category.

     In February 1999 the Company announced the introduction of two new brand
names, Josephine Chaus Studio and Josephine Chaus Essentials, as part of an
effort to better serve the lifestyle needs of women today. In addition, the
Company announced the relaunch of its highly successful Chaus career sportswear
and Chaus Sport casual sportswear businesses under the brand names Josephine
Chaus Collection and Josephine Chaus Sport, respectively. The new lines began
shipping in June 1999 to department stores for the Fall 1999 season.

PRODUCTS

     The Company markets its products as coordinated groups of jackets, skirts,
pants, blouses, sweaters and related accessories principally under the following
brand names that also include products for women and petites:

JOSEPHINE CHAUS COLLECTION (formerly Chaus) - a collection of better tailored
career clothing that includes tailored suits, dresses, jackets, skirts and
pants.

JOSEPHINE CHAUS STUDIO - a new line of better sportswear featuring contemporary
styling and offering a more casual approach to traditional career dressing.

JOSEPHINE CHAUS ESSENTIALS - a new line of better sportswear separates, also
designed with a contemporary approach. This new line includes jackets, skirts,
pants, blouses and sweaters to be mixed and matched.

JOSEPHINE CHAUS SPORT (formerly Chaus Sport) - designed for more relaxed
dressing. This line includes casual tops, sweaters, pants, skirts, shorts and
other items for "true weekend" wear.

     The above products, while sold as separates, are coordinated by styles,
color schemes and fabrics and are designed to be merchandised and worn together.
The Company believes that the target consumers for its products are women aged
24 to 64.

     Women's apparel is generally divided into five price categories, namely
(listed from lowest to highest) "mass merchandise", "moderate", "better",
"bridge" and "designer". These categories are distinguished principally by
differences in price and, as a general matter, by differences in quality. The
Company has positioned its Chaus product line into the opening price points of
the "better" category.

     During fiscal 2000, the suggested retail prices of the Company's Chaus
products ranged between $24.00 and $280.00. The Company's jackets ranged in
price between $98.00 and $180.00, its blouses and sweaters ranged in price
between $38.00 and $120.00, its skirts and pants ranged in price between $48.00
and $110.00, and its knit tops and bottoms ranged in price between $24.00 and
$68.00.

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     The following table sets forth a breakdown by percentage of the Company's
net sales by brand for fiscal 1998 through fiscal 2000:

                                            Fiscal Year Ended June 30,
                                           2000        1999        1998
                                          ------      ------      ------
Josephine Chaus Collection (1)              30%         41%         39%
Josephine Chaus Woman Collection (1)        11          14          12
Josephine Chaus Petite Collection (1)        8          13          10
Josephine Chaus Sport (1)                   24          27          29
Josephine Chaus Essentials (1)               7           0           0
Josephine Chaus Studio (1)                  20           2           0
Nautica                                      0           2           8
Other (2)                                    0           1           2
                                          ------      ------      ------
   Total                                   100%        100%        100%

(1) Josephine Chaus Collection and Josephine Chaus Sport were formerly Chaus
    Collection and Chaus Sport, respectively. The Josephine Chaus trade names
    began shipping in June 1999 to department stores for the Fall 1999 season.
(2) Outlet stores offset by intercompany elimination

-----------------

LICENSE AGREEMENT WITH NAUTICA

     In September 1995 the Company entered into a license agreement (the
"Nautica License Agreement") with Nautica Apparel Inc. ("Nautica"), a leading
name in men's apparel, pursuant to which the Company obtained an exclusive
license to design, contract for the manufacture of and market a new women's
apparel line under the Nautica brand name. Effective October 1998, the Company
and Nautica agreed to terminate the Nautica License Agreement.

CUSTOMERS

     The Company's products are sold nationwide in an estimated 1,500 doors
operated by approximately 90 department store chains, specialty retailers and
other retail outlets. The Company does not have any long-term commitments or
contracts with any of its customers.

     The Company extends credit to its customers based upon an evaluation of the
customer's financial condition and credit history and generally does not require
collateral. At June 30, 2000 and 1999, approximately 77% and 82%, respectively,
of the Company's accounts receivable were due from department store customers
owned by three single corporate entities. During fiscal 2000, approximately 86%
of the Company's net sales were made to department store customers owned by four
single corporate entities, as compared to 82% in fiscal 1999 and 1998. Sales to
Dillard's Department Stores accounted for 42% of net sales in fiscal 2000, 40%
in fiscal 1999 and 43% in fiscal 1998. Sales to the May Department Stores
Company accounted for approximately 26% of the Company's net sales in fiscal
2000, 28% in fiscal 1999 and 29% in fiscal 1998. Sales to TJX Companies, Inc.
accounted for approximately 13% of net sales in fiscal 2000, 7% in fiscal 1999
and 3% in fiscal 1998. Sales to Federated Department Stores accounted for
approximately 5% of net sales in fiscal 2000 and 7% of net sales in fiscal 1999
and 1998. As a result of the Company's dependence on its major customers, such
customers may have the ability to influence the Company's business decisions.
The loss of or significant decrease in business from any of its major customers
would have a material adverse effect on the Company's financial position and
results of operations.

                                       3

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SALES AND MARKETING

     The Company's selling operation is highly centralized. Sales to the
Company's department and specialty store customers are made primarily through
the Company's New York City showrooms. As of June 30, 2000, the Company had an
in-house sales force of 26, all of whom are located in the New York City
showrooms. Senior management, principally Josephine Chaus, Chairwoman of the
Board, Chief Executive Officer and principal stockholder of the Company, and Ivy
Karkut, President of the Company, actively participate in the planning of the
Company's marketing and selling efforts. The Company does not employ independent
sales representatives or operate regional sales offices, but it does participate
in various regional merchandise marts. This sales structure enables management
to control the Company's selling operation more effectively, to limit travel
expenses, as well as to deal directly with, and be readily accessible to, major
customers.

     Products are marketed to department and specialty store customers during
"market weeks," generally four to five months in advance of each of the
Company's selling seasons. The Company assists its customers in allocating their
purchasing budgets among the items in the various product lines to enable
consumers to view the full range of the Company's offerings in each collection.
During the course of the retail selling seasons, the Company monitors its
product sell-through at retail in order to directly assess consumer response to
its products.

     The Company emphasizes the development of long-term customer relationships
by consulting with its customers concerning the style and coordination of
clothing purchased by the store, optimal delivery schedules, floor presentation,
pricing and other merchandising considerations. Frequent communications between
the Company's senior management and other sales personnel and their counterparts
at various levels in the buying organizations of the Company's customers is an
essential element of the Company's marketing and sales efforts. These contacts
allow the Company to closely monitor retail sales volume to maximize sales at
acceptable profit margins for both the Company and its customers. The Company's
marketing efforts attempt to build upon the success of prior selling seasons to
encourage existing customers to devote greater selling space to the Company's
product lines and to penetrate additional individual stores within the Company's
existing customers. The Company's largest customers discuss with the Company
retail trends and their plans regarding their anticipated levels of total
purchases of Company products for future seasons. These discussions are intended
to assist the Company in planning the production and timely delivery of its
products.

DESIGN

     The Company's products and certain of the fabrics from which they are made
are designed by an in-house staff of fashion designers. The 20 person design
staff, headed by Judith Leech, monitors current fashion trends and changes in
consumer preferences. Ms. Chaus, who is instrumental in the design function,
meets regularly with the design staff to create, develop and coordinate the
seasonal collections. The Company believes that its design staff is well
regarded for its distinctive styling and its ability to contemporize fashion
classics. Emphasis is placed on the coordination of outfits and quality of
fabrics to encourage the purchase of more than one garment.

MANUFACTURING AND DISTRIBUTION

     The Company does not own any manufacturing facilities; all of its products
are manufactured in accordance with its design specifications and production
schedules through arrangements with independent manufacturers. The Company
believes that outsourcing its manufacturing maximizes its flexibility while
avoiding significant capital expenditures, work-in-process buildup and the costs
of a large workforce. A substantial amount (approximately 90%) of its product is
manufactured by approximately 25 key independent suppliers located primarily in
South Korea, Hong Kong, Taiwan, China, Indonesia and elsewhere in the Far East.
Approximately 10% of the Company's products are manufactured in the United
States and the Caribbean Basin. No contractual obligations exist between the
Company and its manufacturers except on an order-by-order basis. During fiscal
2000, the Company purchased approximately 71% of its finished goods

                                       4

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from its ten largest manufacturers, including approximately 26% of its purchases
from its largest manufacturer. Contracting with foreign manufacturers enables
the Company to take advantage of prevailing lower labor rates and to use a
skilled labor force to produce high quality products.

     Generally, each manufacturer agrees to produce finished garments on the
basis of purchase orders from the Company, specifying the price and quantity of
items to be produced and supported by a letter of credit naming the manufacturer
as beneficiary to secure payment for the finished garments.

     The Company's technical production support staff, located in New York City,
produces patterns, prepares production samples from the patterns for
modification and approval by the Company's design staff, and marks and grades
the patterns in anticipation of production. While the factories have the
capability to perform these services, the Company believes that its personnel
can best express its design concepts and efficiently supervise production to
better ensure that a quality product is produced. Once production fabric is
shipped to them, the manufacturers produce finished garments in accordance with
the production samples and obtain necessary quota allocations and other
requisite customs clearances. Branch offices of the Company's subsidiaries in
Korea, Taiwan and Hong Kong monitor production at each manufacturing facility to
control quality, compliance with the Company's specifications and timely
delivery of finished garments, and arrange for the shipment of finished products
to the Company's New Jersey distribution center. Almost all finished goods are
shipped to the Company's New Jersey distribution center for final inspection,
assembly into collections, allocation and shipment to customers.

     The Company believes that the number and geographical diversity of its
manufacturing sources minimize the risk of adverse consequences that would
result from termination of its relationship with any of its larger
manufacturers. The Company also believes that it would have the ability to
develop, over a reasonable period of time, adequate alternate manufacturing
sources should any of its existing arrangements terminate. However, should any
substantial number of such manufacturers become unable or unwilling to continue
to produce apparel for the Company or to meet their delivery schedules, or if
the Company's present relationships with such manufacturers were otherwise
materially adversely affected, there can be no assurance that the Company would
find alternate manufacturers of finished goods on satisfactory terms to permit
the Company to meet its commitments to its customers on a timely basis. In such
event, the Company's operations could be materially disrupted, especially over
the short-term. The Company believes that relationships with its major
manufacturers are satisfactory.

     The Company uses a broad range of fabrics in the production of its
clothing, consisting of synthetic fibers (including polyester and acrylic),
natural fibers (including cotton and wool), and blends of natural and synthetic
fibers. The Company does not have any formal, long-term arrangements with any
fabric or other raw material supplier. During fiscal 2000, virtually all of the
fabrics used in the Company's products manufactured in the Far East were ordered
from the Company's five largest suppliers in the Far East, which are located in
Japan, Taiwan, Hong Kong and Korea, and virtually all of the fabric used in the
Company's products manufactured in the United States and the Caribbean Basin
were ordered by three major suppliers from these regions. The Company selects
the fabrics to be purchased, which are generally produced for it in accordance
with its own specifications. To date, the Company has not experienced any
significant difficulty in obtaining fabrics or other raw materials and considers
its sources of supply to be adequate.

     The Company operates under substantial time constraints in producing each
of its collections. Orders from the Company's customers generally precede the
related shipping period by up to five months. However, proposed production
budgets are prepared substantially in advance of the Company's initial
commitments for each collection. In order to make timely delivery of merchandise
which reflects current style trends and tastes, the Company attempts to schedule
a substantial portion of its fabric and manufacturing commitments relatively
late in a production cycle. However, in order to secure adequate amounts of
quality raw materials, especially greige (i.e., "undyed") goods, the Company
must make substantial advance commitments to suppliers of such goods, often as
much as seven months prior to the receipt of firm

                                       5

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orders from customers for the related merchandise. Many of these early
commitments are made subject to changes in colors, assortments and/or delivery
dates.

IMPORTS AND IMPORT RESTRICTIONS

     The Company's arrangements with its manufacturers and suppliers are subject
to the risks attendant to doing business abroad, including the availability of
quota and other requisite customs clearances, the imposition of export duties,
political and social instability, currency revaluations, and restrictions on the
transfer of funds. Bilateral agreements between exporting countries, including
those from which the Company imports substantially all of its products, and the
United States' imposition of quotas, limits the amount of certain categories of
merchandise, including substantially all categories of merchandise manufactured
for the Company, that may be imported into the United States. Furthermore, the
majority of such agreements contain "consultation clauses" which allow the
United States to impose at any time restraints on the importation of categories
of merchandise which, under the terms of the agreements, are not subject to
specified limits. The bilateral agreements through which quotas are imposed have
been negotiated under the framework established by the Arrangement Regarding
International Trade in Textiles, known as the Multifiber Arrangement ("MFA")
which has been in effect since 1974. The United States has concluded
international negotiations known as the "Uruguay Round" in which a variety of
trade matters were reviewed and modified. Quotas established under the MFA will
be gradually phased out over a ten year transition period, after which the
textile and clothing trade will be fully integrated into the General Agreement
on Trade and Tariffs ("GATT") and will be subject to the same disciplines as
other sections. The GATT agreement provides for expanded trade, improved market
access, lower tariffs and improved safeguard mechanisms.

     The United States and the countries in which the Company's products are
manufactured may, from time to time, impose new quotas, duties, tariffs or other
restrictions, or adversely adjust presently prevailing quotas, duty or tariff
levels, with the result that the Company's operations and its ability to
continue to import products at current or increased levels could be adversely
affected. The Company cannot now predict the likelihood or frequency of any such
events occurring. The Company monitors duty, tariff and quota-related
developments, and seeks continually to minimize its potential exposure to
quota-related risks through, among other measures, geographical diversification
of its manufacturing sources, allocation of production of merchandise categories
where more quota is available and shifts of production among countries and
manufacturers. The expansion in the past few years of the Company's varied
manufacturing sources and the variety of countries in which it has potential
manufacturing arrangements, although not the result of specific import
restrictions, have had the result of reducing the potential adverse effect of
any increase in such restrictions. In addition, substantially all of the
Company's products are subject to United States customs duties.

BACKLOG

     As of September 10, 2000 and 1999, the Company's order book reflected
unfilled customer orders for approximately $51.1 and $62.0 million of
merchandise, respectively. Order book data at any date are materially affected
by the timing of the initial showing of collections to the trade, as well as by
the timing of recording of orders and of shipments. The order book represents
customer orders prior to discounts. The Company does not believe that
cancellations, rejections or returns will materially reduce the amount of sales
realized from such backlog.

TRADEMARKS

     CHAUS(R), CHAUS SPORT(R), CHAUS WOMAN(R) and MS. CHAUS(R) are registered
trademarks of the Company in the United States for use on ladies' garments.
These trademarks are renewable during the years 2002 through 2008. JOSEPHINE(R)
is also a registered trademark of the Company in the United States, renewable in
the year 2001, for use on ladies' blouses and sweaters. The Company has pending
applications to register J. CHAUS and JOSEPHINE CHAUS for ladies garments. The
Company considers its trademarks to be strong and highly recognized, and to have
significant value in the marketing of its products.

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     The Company has also registered its CHAUS(R), CHAUS SPORT(R), CHAUS
WOMAN(R), JOSEPHINE CHAUS(R) and JOSEPHINE(R) marks for women's apparel in
certain foreign countries and has legal trademark rights in certain foreign
countries for selected women's accessories including handbags, small leather
goods and footwear. The Company has pending applications to register CHAUS and
JOSEPHINE CHAUS in the European Economic Community covering clothing,
accessories and cosmetics.

COMPETITION

     The women's apparel industry is highly competitive, both within the United
States and abroad. The Company competes with many apparel companies, some of
which are larger, and have better established brand names and greater resources
than the Company. In some cases the Company also competes with private-label
brands of its department store customers.

     The Company believes that an ability to effectively anticipate, gauge and
respond to changing consumer demand and taste relatively far in advance, as well
as an ability to operate within substantial production and delivery constraints
(including obtaining necessary quota allocations), is necessary to compete
successfully in the women's apparel industry. Consumer and customer acceptance
and support, which depend primarily upon styling, pricing, quality (both in
material and production), and product identity, are also important aspects of
competition in this industry. The Company believes that its success will depend
upon its ability to remain competitive in these areas.

     Furthermore, the Company's traditional department store customers, which
account for a substantial portion of the Company's business, encounter intense
competition from off-price and discount retailers, mass merchandisers and
specialty stores. The Company believes that its ability to increase its present
levels of sales will depend on such customers' ability to maintain their
competitive position and the Company's ability to increase its market share of
sales to department stores.

EMPLOYEES

     At June 30, 2000, the Company employed 312 employees as compared with 306
employees at June 30, 1999. This total includes 59 in managerial and
administrative positions, approximately 93 in design, production and production
administration, 33 in marketing, merchandising and sales and 68 in distribution.
Of the Company's total employees, 59 were located in the Far East. The Company
is a party to a collective bargaining agreement with the Amalgamated Workers
Union, Local 88, covering 94 full-time employees. This agreement expires August
31, 2003.

     The Company considers its relations with its employees to be satisfactory
and has not experienced any business interruptions as a result of labor
disagreements with its employees.

EXECUTIVE OFFICERS

The executive officers of the Company are:
NAME                AGE   POSITION
Josephine Chaus     49    Chairwoman of the Board and Chief Executive Officer
Ivy Karkut          46    President and Director
Nicholas DiPaolo    59    Vice Chairman of the Board and Chief Operating Officer
Barton Heminover    46    Vice President of Finance

Executive officers serve at the discretion of the Board of Directors.

     Josephine Chaus has been an employee of the Company in various capacities
since its inception. She has been a director of the Company since 1977,
President from 1980 through February 1993, Chief Executive Officer from July
1991 through September 1994 and again since December 1998, Chairwoman of the
Board since 1991 and member of the Office of the Chairman since September 1994.

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     Ivy Karkut was appointed President of the Company in November 1999. Prior
to joining the Company, Ms. Karkut was employed by the Tommy Hilfiger
Corporation as Senior Vice President of Sales for Tommy Jeans from 1995 to 1999.
Prior to 1995, Ms. Karkut served as Vice President of Sales and Marketing for
Chaps by Ralph Lauren, as Vice President of Sales for Ralph Lauren's Men's
Sportswear, and as Head of Men's Sales for Liz Claiborne.

     Nicholas DiPaolo was appointed Vice Chairman of the Board and Chief
Operating Officer in September 2000 and served as a director of the Company from
February 1999 through September 2000. Prior to joining the Company, Mr. DiPaolo
served as a consultant to the apparel industry and as a private investor. From
1991 through May 1997, Mr. DiPaolo served as Chairman, President and Chief
Executive Officer of Salant Coporation, a diversified apparel company which he
joined in 1988 as President and Chief Operating Officer. Prior to 1988, he held
executive positions with a number of apparel and related companies, including
Manahattan Industries, a menswear company, and The Villager, a women's
sportswear company. Mr. DiPaolo currently serves as a director of JPS Industries
Inc., a publicly traded manufacturer of specialty extruded and woven materials.

     Barton Heminover was appointed Vice President of Finance in January 2000
and was Vice President - Corporate Controller and Assistant Secretary to the
Company from 1996 to 2000. From January 1983 to July 1996 he was employed by
Petrie Retail, Inc. (formerly Petrie Stores Corporation), a woman's retail
apparel chain, serving as Vice President/Treasurer from 1986 to 1994 and as Vice
President/Financial Controller from 1994 to 1996.

     Effective January 15, 2000, Stuart Levy, the Company's Chief Financial
Officer, left the Company to pursue other business interests. He is currently
serving as a consultant to the Company. Mr. Heminover has assumed Mr. Levy's
responsibilities.

ITEM 2. PROPERTIES.

     The Company's principal executive offices were relocated from 1410 Broadway
to 530 Seventh Avenue in New York City during the third quarter of fiscal 2000.
These facilities also house the Company's showrooms and its sales, design,
production and merchandising staffs. The lease for the new facility covers
28,000 square feet and expires in May 2009. Net base rental expense for the
executive offices aggregated approximately $0.9 million in fiscal 2000, $0.8
million in fiscal 1999 and $0.7 million in fiscal 1998.

     The Company also relocated its technical production support facilities
(including its sample and patternmakers) from 520 to 519 Eighth Avenue in New
York City beginning February 1, 2000. The lease for the new facility covers
15,000 square feet and expires in August 2009. Net base rental expense for the
technical production support facilities aggregated approximately $0.3 million
for fiscal 2000 and $0.2 million for fiscal 1999 and 1998.

     The Company's distribution center is located in Secaucus, New Jersey where
the Company leases approximately 276,000 square feet. This facility also houses
the Company's administrative and finance personnel, its computer operations, and
its one retail outlet store. This space is occupied under a lease expiring June
30, 2004. Base rental expense for the Secaucus facilities aggregated
approximately $1.1 million in fiscal 2000, 1999 and 1998.

     Office locations are also leased in Hong Kong, Korea and Taiwan, with
annual aggregate rental expense of approximately $0.1 million for fiscal 2000
and 1999 and $0.2 million for fiscal 1998.

ITEM 3. LEGAL PROCEEDINGS.

     By Demand for Arbitration filed on June 9, 1999, the former chief executive
officer of the Company, Andrew Grossman, commenced an arbitration before the
American Arbitration Association ("AAA") in New York alleging breach of his
employment contract. By Award of Arbitrators (the "Award") dated June 30, 2000,
a panel of the AAA awarded Mr. Grossman a portion of the relief he had
requested. Pursuant to the Award, the Company paid Mr. Grossman

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$848,347 (less applicable withholding taxes) on July 25, 2000. The Company made
two additional payments of $83,333 each (less applicable withholding taxes) on
July 31, 2000 and August 31, 2000. The Award further provides that Mr. Grossman
is to receive net profit participation of 2.5% of the annual net profit (as that
term is defined in the employment contract between Mr. Grossman and the Company)
of the Company for the fiscal year ended June 30, 2000 upon filing of the
Company's fiscal year 2000 Form 10-K report. In fiscal 2000 and 1999, the
Company had accrued $0.6 million and $0.5 million, respectively, pursuant to the
employment contract. Mr. Grossman is to also receive net profit participation of
 .4166% of the annual net profit (as that term is defined in the employment
contract between Mr. Grossman and the Company) for the fiscal year ended June
30, 2001 upon filing of the Company's fiscal year 2001 Form 10-K report.

     There are no material pending legal proceedings to which the Company is a
party or to which any of its properties is subject.

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

     None.






                                       9

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PART II

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

     The Common Stock is traded on the New York Stock Exchange ("NYSE") under
the symbol "CHS."

     The Company received a notice from the New York Stock Exchange (the "NYSE")
in March 2000, that based upon new continued listing requirements adopted by the
NYSE, the Company was below NYSE criteria in respect of the requirements that
total market capitalization be not less than $50 million and stockholders'
equity be not less than $50 million. As of June 30, 2000, the Company's
stockholders' equity was approximately $18.3 million and its total market
capitalization was approximately $18.7 million. In July 2000, the NYSE accepted
the Company's 18 month plan for attaining compliance with the new continued
listing requirements and indicated that the Company would be monitored on a
quarterly basis by the NYSE for compliance with the plan. On July 21, 2000, the
NYSE notified the Company that failure to restore the price of its common stock
above $1.00 (based upon a 30-day average) within six months of the notification
would result in the delisting of its common stock. The Company's stock price has
been below the $1.00 minimum requirement for continued listing for several
months and the retail environment has continued to be difficult. Therefore, the
Company determined that it is more prudent to invest in its core business and
continue to meet the needs of its retail customers, rather than to divert
resources and reduce investment in the business in an attempt to maintain its
listing. As a result, on September 28, 2000 the Company announced that it is
seeking a quotation of its shares of common stock on the OTC Bulletin Board in
lieu of its NYSE listing. NYSE trading is expected to be discontinued effective
prior to the opening of trading on October 6, 2000. After such date, the
Company's common stock will be traded in the over the counter market and
quotations are expected to be available on the OTC Bulletin Board. The Company
is unable to predict the effect, if any, of the delisting on the market for and
liquidity of its common stock which will depend upon, among other factors, the
availability of market mamers for the stock. The Company believes it has
adequate capital resources for the foreseeable future.

     The following table sets forth for each of the Company's fiscal periods
indicated the high and low sales prices for the Common Stock as reported on the
NYSE.

                                                            HIGH       LOW
                                                            ----       ---
FISCAL 1999
                  First Quarter..........................  $3.875    $2.625
                  Second Quarter.........................   4.125     2.188
                  Third Quarter..........................   2.625     1.688
                  Fourth Quarter.........................   3.313     1.875
FISCAL 2000
                  First Quarter..........................  $3.188    $2.563
                  Second Quarter.........................   2.750     2.188
                  Third Quarter..........................   2.438     1.500
                  Fourth Quarter.........................   1.750     0.500

As of September 22, 2000, the Company had approximately 400 stockholders of
record.

     The Company has not declared or paid cash dividends or made other
distributions on its Common Stock since prior to its 1986 initial public
offering. The payment of dividends, if any, in the future is within the
discretion of the Board of Directors and will depend on the Company's earnings,
its capital requirements and financial condition. It is the present intention of
the Board of Directors to retain all earnings, if any, for use in the Company's
business operations and, accordingly, the Board of Directors does not expect to
declare or pay any dividends in the foreseeable future. In addition, the
Company's Financing Agreement prohibits the Company from declaring dividends or
making other distributions on its capital stock, subject to certain exceptions.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Financial Condition, Liquidity and Capital Resources."


                                       10

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.

     The following financial information is qualified by reference to, and
should be read in conjunction with, the Financial Statements of the Company and
the notes thereto, as well as Management's Discussion and Analysis of Financial
Condition and Results of Operations contained elsewhere herein.

STATEMENT OF OPERATIONS DATA:

<TABLE>
<CAPTION>
                                                                            FISCAL YEAR ENDED JUNE 30,
                                                  -------------------------------------------------------------------------------
                                                     2000            1999             1998              1997              1996
                                                     ----            ----             ----              ----              ----
                                                                     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                <C>             <C>             <C>               <C>               <C>
Net sales                                          $ 181,538       $ 187,875       $ 191,546         $ 160,100         $ 170,575
Cost of goods sold                                   142,909         137,958         142,175           125,422(2)        147,994
                                                  -----------     -----------     -----------      --------------     -----------
Gross profit                                          38,629          49,917          49,371            34,678            22,581
Selling, general and administrative expenses          36,075          36,512          38,462            40,924            40,162
Restructuring expenses                                 --              --              --                2,250(1)          --
Interest expense, net                                  2,358           2,360           6,353             7,917             6,504
                                                  -----------     -----------     -----------      --------------     -----------
Income (loss) before income tax provision                196          11,045           4,556           (16,413)          (24,085)
 Provision for income taxes                                4             200             245                50               301
                                                  -----------     -----------     -----------      --------------     -----------
Net income (loss)                                  $     192       $  10,845       $   4,311         $ (16,463)        $ (24,386)
                                                  ===========     ===========     ===========      ==============     ===========
Basic earnings (loss) per share (3)                $    0.01       $    0.40       $    0.28         $   (2.46)        $   (3.91)
                                                  ===========     ===========     ===========      ==============     ===========
Diluted earnings (loss) per share (4)              $    0.01       $    0.40       $    0.28         $   (2.46)        $   (3.91)
                                                  ===========     ===========     ===========      ==============     ===========
Weighted average number of common shares              27,174          27,116          15,296             6,687             6,239
    outstanding - basic (5)                       ===========     ===========     ===========      ==============     ===========

Weighted average number of common and common          27,183          27,191          15,296             6,687             6,239
  equivalent shares outstanding - diluted (5)     ===========     ===========     ===========      ==============     ===========
</TABLE>


BALANCE SHEET DATA

<TABLE>
<CAPTION>
                                                                                AS OF JUNE 30,
                                                  ------------------------------------------------------------------------
                                                    2000           1999           1998            1997             1996
                                                    ----           ----           ----            ----             ----
<S>                                               <C>            <C>            <C>             <C>             <C>
Working capital (deficiency)                      $ 23,891       $ 29,330       $ 18,679        $ (32,729)      $ (19,483)
Total assets                                        49,045         53,484         39,012           34,138          32,742
Short-term debt, including current portion of
  long-term debt                                     1,000          1,000          1,000           37,756          26,077
Long-term debt                                      11,500         12,500         13,500           26,374          23,588
Stockholders' equity (deficiency)                   18,302         17,860          7,015          (57,060)        (40,610)
</TABLE>

--------------

(1)      The Company recorded a $2.3 million restructuring charge in the fourth
         quarter of fiscal 1997 for costs incurred in connection with a
         restructuring. The costs related to the closing of the Company's outlet
         stores (such as professional fees, lease termination expenses, and
         write-off of fixed assets), in addition to professional fees and other
         expenses associated with the implementation of the Company's
         restructuring program which was completed on January 29, 1998.

(2)      Includes $1.1 million for liquidation of inventory as a result of
         closing the Company's outlet stores.

(3)      Computed by dividing the applicable net income by the weighted average
         number of shares of common stock outstanding during the year.

(4)      Computed by dividing the applicable net income by the weighted average
         number of common shares outstanding and common stock equivalents
         outstanding during the year.

(5)      All share data reflects the 1 for 10 reverse stock split which was
         effected December 9, 1997 and reflects the retroactive adjustment for
         the bonus element of the Rights Offering, which was consummated on
         January 26, 1998.

                                       11

<PAGE>

ITEM 7. DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS.

RESULTS OF OPERATIONS

     The following table sets forth, for the years indicated, certain items
expressed as a percentage of net sales.

                                                   Fiscal Year Ended June 30,
                                                   --------------------------
                                                  2000        1999        1998
                                                  ----        ----        ----
Net Sales                                        100.0%      100.0%      100.0%
Gross profit                                      21.3        26.6        25.8
Selling, general and administrative expenses      19.9        19.4        20.0

Interest expense                                   1.3         1.3         3.3
Net income                                         0.1         5.8         2.3


Fiscal 2000 Compared to Fiscal 1999

     Net sales for fiscal 2000 decreased 3.4% or $6.4 million to $181.5 million
as compared to $187.9 million for fiscal 1999. The decrease in net sales was
primarily due to a decrease in sales associated with the Company's Nautica
product line ($4.2 million) which was discontinued in the second quarter of
fiscal 1999 and a decrease in sales of the Company's Chaus product line ($2.2
million). The decrease in Chaus product line sales was primarily due to an
increase in customer discounts as a result of the highly promotional environment
which has continued since the holiday season, partially offset by a 10.4%
increase in units shipped.

     Gross profit for fiscal 2000 decreased $11.3 million to $38.6 million as
compared to $49.9 million for fiscal 1999. As a percentage of sales, gross
profit decreased to 21.3% for fiscal 2000 from 26.6% for fiscal 1999. The
decrease in gross profit is primarily the result of increased customer
discounts.

     Selling, general and administrative ("SG&A") expenses decreased by $0.4
million for fiscal 2000 as compared to fiscal 1999. The decrease resulted from
the elimination of $2.5 million of expenses attributable to the Nautica licensed
product line which was discontinued in the second quarter of fiscal 1999,
partially offset by an increase of $2.1 million in SG&A expenses associated with
the Company's Chaus product lines primarily as a result of increased payroll
expenses and professional fees. SG&A expenses for fiscal 2000 and fiscal 1999
included $0.5 million and $0.6 million, respectively, in connection with the
arbitration award to the Company's former Chief Executive Officer. Refer to Item
3. Legal Proceedings. As a percentage of net sales, SG&A expenses were
approximately 19.9% in fiscal 2000 as compared to 19.4% in fiscal 1999.

     Interest expense was approximately the same for fiscal 2000 as compared to
fiscal 1999 primarily as a result of decreases in bank borrowings offset by
higher interest rates.

     Net income for fiscal 2000 decreased to $0.2 million from $10.8 million for
the comparable period last year. Net income for fiscal 1999 includes a net loss
of $2.9 million, or $0.11 per diluted share, associated with the licensed
Nautica business which was discontinued in the second quarter of fiscal 1999.

                                       12

<PAGE>

Fiscal 1999 Compared to Fiscal 1998

     In fiscal 1999, net sales decreased 1.9% or $3.6 million to $187.9 million
as compared to $191.5 million for fiscal 1998. The decrease in net sales was
primarily due to a decrease in sales of the Company's retail outlet stores
($10.7 million) resulting from the closing of all but one of the Company's
retail outlet stores in January 1998 and a decrease in sales associated with the
Company's Nautica product line ($10.8 million) which was discontinued in the
second quarter of fiscal 1999. These decreases were offset in large part by
increased sales of the Company's Chaus product lines through department store
channels, which increased $17.8 million as a result of a 16% increase in units
shipped.

     Gross profit for fiscal 1999 increased $0.5 million to $49.9 million as
compared to $49.4 for fiscal 1998. As a percentage of net sales, gross profit
increased to 26.6% for fiscal 1999 from 25.8% for fiscal 1998. This increase was
primarily due to the elimination of the Company's retail outlet stores in
January 1998 and the termination of the Company's Nautica product line in the
second quarter of fiscal 1999, both of which carried lower gross profit margins
than sales of the Company's Chaus product lines sold through department store
channels and, to a lesser extent, improved gross profit margin for the Chaus
product lines.

     SG&A expenses decreased by $2.0 million compared to the prior year. This
decrease was primarily due to the termination of the Nautica licensed product
line during the second quarter of fiscal 1999 ($3.2 million) and the closing of
all but one of the Company's retail outlet stores in January 1998 ($2.7
million). These decreases were partially offset by an increase in operating
expenses ($3.9 million) primarily related to the increase in sales of the
Company's Chaus product lines sold through department store channels and
expenses incurred in support of sales growth planned for fiscal year 2000. SG&A
expenses as a percentage of net sales decreased from 20.0% in fiscal 1998 to
19.4% in fiscal 1999. This decrease was primarily due to the elimination of the
Company's retail outlet stores which carried a higher SG&A expense as a
percentage of net sales.

     Interest expense decreased by $4.0 million as compared to the prior year as
a result of the conversion of subordinated debt to equity in connection with the
Company's restructuring which was completed on January 29, 1998. To a lesser
extent, decreases in bank borrowings and lower interest rates on bank borrowings
also contributed to the decrease in interest expense.

     Net income increased $6.5 million for fiscal 1999, up 152% over the prior
year. This includes a net loss of $2.9 million, or $0.11 per diluted share,
associated with the licensed Nautica business which was discontinued in the
second quarter of fiscal 1999.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

General

     Net cash provided by operating activities was $4.6 million for fiscal 2000
and $5.6 million in fiscal 1999 as compared to net cash used in operating
activities of $5.8 million for fiscal 1998. Net cash provided by operating
activities for fiscal 2000 resulted primarily from decreases in inventory and
accounts receivable of $4.1 million and $3.1 million, respectively, partially
offset by decreases in accounts payable of $5.0 million.

     In fiscal 2000 and 1999, purchases of fixed assets were $4.9 million and
$0.2 million, respectively. Fiscal 2000 expenditures consisted primarily of
leasehold improvements and furniture and fixtures for the new 530 Seventh Avenue
and 519 Eight Avenue locations. Additional expenditures included upgrades to the
Company's distribution systems,

                                       13

<PAGE>

telephone system and PC hardware and software. Fiscal 1999 expenditures
consisted of primarily computer hardware and software systems.

     The Company also incurred expenditures of $0.4 million in fiscal 2000 for
in-store shops expected to be completed in early fiscal 2001. In fiscal 2001,
the Company anticipates capital expenditures of approximately $2.0 million
consisting of leasehold improvements, furniture and fixtures, in-store shops and
Management Information System upgrades.

Financing Agreement

     In October 1997, the Company and BNY Financial Corporation ("BNYF"), a
wholly owned subsidiary of General Motors Acceptance Corp. ("GMAC") entered into
a financing agreement (the "Financing Agreement"). The Financing Agreement,
which was amended on June 3, 1998, consists of two facilities: (i) the Revolving
Facility which is a $45.5 million five-year revolving credit line with a $34.0
million sublimit for letters of credit, and (ii) the Term Loan which is a $14.5
million term loan facility. Each facility matures on December 31, 2002. At June
30, 2000, the Company had availability of approximately $6.4 million (inclusive
of overadvance availability) under the Financing Agreement. The Company had no
borrowings at June 30, 2000 under the Revolving Facility.

     Interest on the Revolving Facility accrues at 1/2 of 1% above the Prime
Rate (9.50% at June 30, 2000) and is payable on a monthly basis, in arrears.
Interest on the Term Loan accrues at an interest rate ranging from 1/2 of 1%
above the Prime Rate to 1 1/2% above the Prime Rate, which interest rate will be
determined, from time to time, based upon the Company's availability under the
Revolving Facility

     Amortization payments in the amount of $250,000 are payable quarterly in
arrears in connection with the Term Loan. Eight amortization payments have been
made resulting in a balance of $12.5 million at June 30, 2000. A balloon payment
in the amount of $10.25 million is due on December 31, 2002. In the event of the
earlier termination by the Company of the Financing Agreement, the Company will
be liable for termination fees initially equal to $2.8 million, and declining to
$2.2 million after October 8, 2000. The Company's obligations under the
Financing Agreement are secured by a first priority lien on substantially all of
the Company's assets, including the Company's accounts receivable, inventory and
trademarks.

     The Financing Agreement contains financial covenants requiring, among other
things, the maintenance of minimum levels of tangible net worth, working capital
and minimum permitted profit (maximum permitted loss). The Financing Agreement
also contains certain restrictive covenants which, among other things, limit the
Company's ability to incur additional indebtedness or liens and to pay
dividends. On September 21, 2000, the Financing Agreement was amended to
establish certain financial covenants for the years ending June 30, 2000 and
June 30, 2001.

Future Financing Requirements

     At June 30, 2000,the Company had working capital of $23.9 million. The
Company's business plan requires the availability of sufficient cash flow and
borrowing capacity to finance its product lines. The Company expects to satisfy
such requirements through cash flow from operations and borrowings under the
Financing Agreement. The Company believes that it has adequate resources to meet
its needs for the foreseeable future.

     The foregoing discussion contains forward-looking statements which are
based upon current expectations and involve a number of uncertainties, including
the Company's ability to maintain its borrowing capabilities under the Financing
Agreement, retail market conditions, and consumer acceptance of the Company's
products.

                                       14

<PAGE>

INFLATION

     The Company does not believe that the relatively moderate rates of
inflation which recently have been experienced in the United States, where it
competes, have had a significant effect on its net sales or profitability.

SEASONALITY

     Historically, the Company's sales and operating results fluctuate by
quarter, with the greatest sales occurring in the Company's first and third
fiscal quarters. It is in these quarters that the Company's Fall and Spring
product lines, which traditionally have had the highest volume of net sales, are
shipped to customers, with revenues recognized at the time of shipment. As a
result, the Company experiences significant variability in its quarterly results
and working capital requirements. Moreover, delays in shipping can cause
revenues to be recognized in a later quarter, resulting in further variability
in such quarterly results.

NEW ACCOUNTING PRONOUNCEMENTS

     In June 1999, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 138, Accounting for
Derivative Instruments and Certain Hedging Activities. This statement addresses
a limited number of issues causing implementation difficulties for entities
applying SFAS No. 133. SFAS No. 133 requires that an entity recognize all
derivative instruments as either assets or liabilities in the balance sheet and
measure those instruments at fair value. If certain conditions are met, a
derivative may be specifically designated as (i) a hedge of the exposure to
changes in the fair value of a recognized asset or liability or an unrecognized
firm commitment, (ii) a hedge of the exposure to variable cash flows of a
forecasted transaction, or (iii) a hedge of the foreign currency exposure of a
net investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and the resulting designation.
This statement is effective for all fiscal quarters of fiscal years beginning
after June 15, 2000. The Company currently has no derivative financial
instruments, and as such, the Company does not expect the standard to have an
impact on its consolidated financial position, liquidity, cash flows and results
of operations.

     In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." This bulletin summarizes certain of the SEC Staff's views in
applying generally accepted accounting principles to revenue recognition in
financial statements. This bulletin, through its subsequent revised releases,
SAB No. 101A and No. 101B, is effective for registrants no later than the fourth
fiscal quarter of fiscal years beginning after December 15, 1999. The Company
does not expect the implementation of this bulletin to have an impact on its
consolidated financial position, liquidity or results of operations.

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

     Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The financial statements are included herein commencing on page F-1.

                                       15

<PAGE>

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 the executive officers of the Company is set
forth in Part I of this Annual Report on Form 10-K.

     Information with respect to the directors of the Company is incorporated by
reference to the information to be set forth under the heading "Election of
Directors" in the Company's definitive proxy statement relating to its 2000
Annual Meeting of Stockholders to be filed pursuant to Regulation 14A (the
"Company's 2000 Proxy Statement").

ITEM 11. EXECUTIVE COMPENSATION.

     Information called for by Item 11 is incorporated by reference to the
information to be set forth under the heading "Executive Compensation" in the
Company's 2000 Proxy Statement.

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

     Information called for by Item 12 is incorporated by reference to the
information to be set forth under the heading "Security Ownership of Certain
Beneficial Owners and Management" in the Company's 2000 Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Information called for by Item 13 is incorporated by reference to the
information to be set forth under the headings "Executive Compensation" and
"Certain Transactions" in the Company's 2000 Proxy Statement.

PART IV

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

     (a) Financial Statements and Financial Statement Schedule: See List of
     Financial Statements and Financial Statement Schedule on page F-1.

     (b) The Company did not file a Form 8-K during the last quarter of its
     fiscal year ended June 30, 2000.

3.1      Restated Certificate of Incorporation (the "Restated Certificate") of
         the Company incorporated by reference to Exhibit 3.1 of the Company's
         Registration Statement on Form S-1, Registration No. 33-5954 (the
         "1986 Registration Statement").

                                       16

<PAGE>

3.2      Amendment dated November 18, 1987 to the Restated Certificate
         incorporated by reference to Exhibit 3.11 of the Company's Registration
         Statement on Form S-2, Registration No. 33-63317 (the "1995
         Registration Statement").

3.3      Amendment dated November 15, 1995 to the Restated Certificate
         (incorporated by reference to Exhibit 3.12 of Amendment No. 1 to the
         1995 Registration Statement).

3.4      Amendment dated December 9, 1998 to the Restated Certificate
         (incorporated by reference to Exhibit 3.13 of the Company's Form 10-K
         for the year ended June 30, 1998 (the "1998 Form 10-K").

3.5      By-Laws of the Company, as amended (incorporated by reference to
         exhibit 3.1 of the Company's Form 10-Q for the quarter ended December
         31, 1987).

3.6      Amendment dated September 13, 1994 to the By-Laws (incorporated by
         reference to Exhibit 10.105 of the Company's Form 10-Q for the quarter
         ended September 30, 1994).

10.9     Agreement dated December 3, 1990 among the Company, Bernard Chaus,
         Josephine Chaus and National Union Fire Insurance Company of
         Pittsburgh, PA, the Company's directors and officers liability carrier
         (incorporated by reference to Exhibit 10.31 of the Company's Form 10-Q
         for the quarter ended December 31, 1990)

+10.10   Employment Agreement, dated July 1, 1991, between the Company and
         Josephine Chaus (incorporated by reference to Exhibit 10.39 of the
         Company's Form 10-K for the year ended June 30, 1991).

+10.11   Employment Agreement, dated September 1, 1994, between the Company and
         Andrew Grossman (incorporated by reference to Exhibit 10.90 of the
         Company's Form 10-K for the year ended June 30, 1994).

10.47    License Agreement dated as of September 6, 1995 between the Company and
         Nautica Apparel Inc. incorporated by reference to Exhibit 10.61 of the
         1995 Registration Statement, confidential portions of which have been
         omitted and filed separately with the Commission subject to an order
         granting confidential treatment).

10.55    Lease dated June 12, 1996 between the Company and L. H. Charney
         Associates, relating to the Company's facility at 1410 Broadway, New
         York, New York (incorporated by reference to Exhibit 10.66 of the
         Company's Form 10-K for the year ended June 30, 1996).

10.68    Second Restated and Amended Financing Agreement dated as of October 10,
         1997, between the Company and BNY Financial Corp. (incorporated by
         reference to Exhibit 10.79 of the Company's Form 10-K for the year
         ended June 30, 1997).

10.69    Agreement dated October 10, 1997, between the Company and BNY Financial
         Corp. issuing 125,000 warrants to purchase Common Stock of the Company
         (incorporated by reference to Exhibit 10.80 of the Company's Form 10-Q
         for the quarter ended September 30, 1997).

                                       17

<PAGE>

10.70    Agreement dated October 10, 1997, between the Company and BNY Financial
         Corp. issuing 375,000 warrants to purchase Common Stock of the Company
         (incorporated by reference to Exhibit 10.81 of the Company's Form 10-Q
         for the quarter ended September 30, 1997).

+10.76   Letter Agreement between the Company and Andrew Grossman dated as of
         January 1, 1998 (incorporated by reference to Exhibit 10.76 of the
         Company's 1998 Form 10-K).

+10.77   1998 Stock Option Plan, including form of related stock option
         agreement (incorporated by reference to Exhibit 10.77 of the Company's
         1998 Form 10-K).

10.78    Amendment No. 1 dated June 3, 1998 to the Second Restated and Amended
         Financing Agreement (incorporated by reference to Exhibit 10.78 of the
         Company's 1998 Form 10-K).

+10.79   Letter Agreement between the Company and Stuart S. Levy dated as of
         July 22, 1998 (incorporated by reference to Exhibit 10.79 of the
         Company's 1998 Form 10-K).

+10.80   Letter Agreement between the Company and Stuart S. Levy dated February
         23, 1999 (incorporated by reference to Exhibit 10.80 of the Company's
         1999 Form 10-K).

10.81    Collective Bargaining Agreement between the Company and Amalgamated
         Workers Union, Local 8 effective as of September 24, 1999 (incorporated
         by reference to exhibit 10.81 of the Company's 1999 Form 10-K).

10.82    Lease between the Company and Adler Realty Company, dated June 1, 1999
         with respect to the Company's executive offices and showroom at 530
         Seventh Avenue, New York City (incorporated by reference to Exhibit
         10.82 of the Company's 1999 Form 10-K).

10.83    Employment Agreement dated November 5, 1999 between the Company and Ivy
         Karkut. (Incorporated by reference to Exhibit 10.82 of the Company's
         Form 10-Q for the quarter ended December 31, 1999).

*10.84   Lease between the Company and Kaufman Eighth Avenue Associates, dated
         September 11, 1999 with respect to the Company's technical support
         facilities at 519 Eighth Avenue, New York City.

*10.85   Amendment dated September 22, 2000 to the Second Restated and Amended
         Financing Agreement.

21       List of Subsidiaries of the Company (incorporated by reference to
         Exhibit 21 of the Company's 1998 Form 10-K).

*23      Consent of Deloitte & Touche LLP.

*27      Financial Data Schedule.



+ Management agreement or compensatory plan or arrangement required to be filed
  as an exhibit.
* Filed herewith.

                                       18

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized, on
September 27, 2000.

                                              BERNARD CHAUS, INC.


                                              By: /s/ Josephine Chaus
                                                  ----------------------------
                                                  Josephine Chaus
                                                  Chairwoman of the Board and
                                                  Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual
Report on Form 10-K has been signed below by the following persons on behalf of
the registrant and in the capacities indicated.


SIGNATURE                     TITLE                           DATE
---------                     -----                           ----

/s/ Josephine Chaus           Chairwoman of the Board and     September 28, 2000
--------------------------    Chief Executive Officer
Josephine Chaus


/s/ Ivy Karkut                President and Director          September 28, 2000
--------------------------
Ivy Karkut


/s/ Barton Heminover          Vice President of Finance       September 28, 2000
--------------------------   (Principal Financial and
Barton Heminover              Accounting Officer)


/s/ Philip G. Barach          Director                        September 28, 2000
--------------------------
Philip G. Barach


/s/ Nicholas DiPaolo          Director                        September 28, 2000
--------------------------
Nicholas DiPaolo


/s/ Terri Kabachnick          Director                        September 28, 2000
--------------------------
Terri Kabachnick


/s/ S. Lee Kling              Director                        September 28, 2000
--------------------------
S. Lee Kling


/s/ Harvey M. Krueger         Director                        September 28, 2000
--------------------------
Harvey M. Krueger


                                       19

<PAGE>


                      BERNARD CHAUS, INC. AND SUBSIDIARIES

         INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

The following consolidated financial statements of Bernard Chaus, Inc. and
subsidiaries are included in Item 8:

Report of Independent Auditors..............................................F-2
Consolidated Balance Sheets -- June 30, 2000 and 1999 ......................F-3
Consolidated Statements of Operations -- Years Ended June 30, 2000, 1999
  and 1998..................................................................F-4
Consolidated Statements of Stockholders' Equity (Deficiency) --
  Years Ended June 30, 2000, 1999 and 1998..................................F-5
Consolidated Statements of Cash Flows -- Years Ended June 30, 2000,
  1999 and 1998.............................................................F-6
Notes to Consolidated Financial Statements..................................F-7

The following consolidated financial statement schedule of Bernard Chaus, Inc.
and subsidiaries is included in Item 14(a)(2):

  Schedule II -- Valuation and Qualifying Accounts..........................S-1


     The other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and, therefore, have been
omitted.


                                      F-1

<PAGE>

                         REPORT OF INDEPENDENT AUDITORS



To the Board of Directors and Stockholders of
Bernard Chaus, Inc.
New York, New York



We have audited the accompanying consolidated balance sheets of Bernard Chaus,
Inc. and subsidiaries as of June 30, 2000 and June 30, 1999 and the related
consolidated statements of operations, stockholders' equity/(deficiency), and
cash flows for each of the three years in the period ended June 30, 2000. Our
audits also included the financial statement schedule listed in the Index at
item 14(a)(2). These financial statements and financial statement schedule are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements and financial statement schedule based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Bernard Chaus, Inc. and
subsidiaries at June 30, 2000 and June 30, 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 2000 in conformity with accounting principles generally accepted in the
United States of America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.


/S/ Deloitte & Touche LLP

New York, New York
August 29, 2000
(September 28, 2000 as to Notes 6 and 7)


                                      F-2

<PAGE>


                      BERNARD CHAUS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
          (In thousands, except number of shares and per share amounts)

<TABLE>
<CAPTION>
                                                                                June 30,         June 30,
ASSETS                                                                            2000            1999
                                                                              ------------     ------------
<S>                                                                           <C>              <C>
Current Assets
  Cash and cash equivalents                                                    $   4,446        $   6,208
  Accounts receivable - net                                                       23,562           26,756
  Inventories                                                                     14,721           18,806
  Prepaid expenses                                                                   405              684
                                                                              ------------     ------------
    Total current assets                                                          43,134           52,454
Fixed assets - net                                                                 5,169              760
Other assets                                                                         742              270
                                                                              ------------     ------------
      Total assets                                                             $  49,045        $  53,484
                                                                              ============     ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
  Accounts payable                                                             $  12,493        $  17,499
  Accrued expenses                                                                 5,750            4,625
  Term loan - current                                                              1,000            1,000
                                                                              ------------     ------------
    Total current liabilities                                                     19,243           23,124
Term loan                                                                         11,500           12,500
                                                                              ------------     ------------
      Total liabilities                                                           30,743           35,624

STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, authorized shares - 1,000,000;
  outstanding shares - none                                                            -                -
Common stock, $.01 par value, authorized shares - 50,000,000;
  issued shares - 27,278,177 at June 30, 2000 and 27,178,177                         273              272
  at June 30, 1999
Additional paid-in capital                                                       125,473          125,224
Deficit                                                                         (105,964)        (106,156)
Less: Treasury stock at cost - 62,270 shares at June 30, 2000 and 1999
                                                                                  (1,480)          (1,480)
                                                                              ------------     ------------
  Total stockholders' equity                                                      18,302           17,860
                                                                              ------------     ------------
    Total liabilities and stockholders' equity                                 $  49,045        $  53,484
                                                                              ============     ============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                       F-3

<PAGE>

                      BERNARD CHAUS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
          (In thousands, except number of shares and per share amounts)

<TABLE>
<CAPTION>
                                                                Fiscal Year Ended June 30,
                                                     -------------------------------------------------
                                                         2000               1999              1998
                                                     ------------       ------------      ------------
<S>                                                  <C>                <C>               <C>
Net sales                                            $    181,538       $    187,875      $    191,546
Cost of goods sold                                        142,909            137,958           142,175
                                                     ------------       ------------      ------------

Gross profit                                               38,629             49,917            49,371
Selling, general and administrative expenses               36,075             36,512            38,462
                                                     ------------       ------------      ------------
Income from operations                                      2,554             13,405            10,909

Interest expense, net                                       2,358              2,360             6,353
                                                     ------------       ------------      ------------

Income before provision for income taxes                      196             11,045             4,556
Provision for income taxes                                      4                200               245
                                                     ------------       ------------      ------------

Net income                                           $        192       $     10,845      $      4,311
                                                     ============       ============      ============

Basic and diluted earnings per share                 $       0.01       $       0.40      $       0.28
                                                     ============       ============      ============
Weighted average number of common shares
    outstanding - basic                                27,174,000         27,116,000        15,296,000
                                                     ============       ============      ============
Weighted average number of common and common
    equivalent shares outstanding - diluted            27,183,000         27,191,000        15,296,000
                                                     ============       ============      ============
</TABLE>





           See accompanying notes to consolidated financial statements

                                       F-4


<PAGE>


                      BERNARD CHAUS, INC. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIENCY)
                     (In thousands, except number of shares)


<TABLE>
<CAPTION>
                                        Common Stock                                            Treasury Stock
                                ------------------------     Additional                   -------------------------
                                 Number Of                    Paid-in       Equity/        Number of
                                   Shares       Amount        Capital      (Deficit)         Shares        Amount        Total
                                -----------   ----------    -----------  -------------    -----------    ----------    ---------
<S>                              <C>            <C>          <C>          <C>               <C>          <C>           <C>
Balance at July 1, 1997          26,899,974     $  269       $  65,463    $ (121,312)       622,700      $ (1,480)     $ (57,060)
Net income                                                                     4,311                                       4,311
Exchange of notes for
  common stock                   10,510,910        105          40,520         --             --             --           40,625
Net proceeds from issuance
     of common stock             13,977,270        140          18,861         --             --             --           19,001
Issuance of warrants                 --           --               138         --             --             --              138
Reverse stock split             (24,209,977)      (242)            242         --          (560,430)         --            --
                                -----------   ----------    -----------  -------------    -----------    ----------    ---------

Balance at July 1, 1998          27,178,177        272         125,224      (117,001)        62,270        (1,480)         7,015
Net income                           --           --             --           10,845          --             --           10,845
                                -----------   ----------    -----------  -------------    -----------    ----------    ---------

Balance at July 1, 1999          27,178,177        272         125,224      (106,156)        62,270        (1,480)        17,860
Net income                           --           --             --              192          --             --              192
Issuance of restricted stock        100,000          1             249         --             --             --              250
                                -----------   ----------    -----------  -------------    -----------    ----------    ---------

Balance at June 30, 2000         27,278,177     $  273       $ 125,473   $  (105,964)        62,270      $ (1,480)     $  18,302
                                ===========   ==========    ===========  =============    ===========    ==========    =========
</TABLE>




           See accompanying notes to consolidated financial statements

                                       F-5

<PAGE>


                      BERNARD CHAUS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                             Year Ended June 30,
                                                                --------------------------------------------
                                                                   2000             1999            1998
                                                                -----------      ----------      -----------
<S>                                                             <C>              <C>             <C>
OPERATING ACTIVITIES
Net income                                                        $   192          $10,845         $ 4,311
Adjustments to reconcile net income to net cash provided by
  (used in) operating activities:
    Depreciation and amortization                                     533            1,310             657
    Provision for losses (recovery) on accounts receivable            138              138             (65)
    Deferred interest on subordinated promissory notes               --              --              1,751
    Stock compensation expense                                        250            --               --
Changes in operating assets and liabilities:
    Accounts receivable                                             3,056           (9,605)         (9,773)
    Inventories                                                     4,085           (1,320)          6,260
    Prepaid expenses and other assets                                 185             (435)            432
    Accounts payable                                               (5,006)           4,494          (6,820)
    Accrued expenses                                                1,125              133            (901)
    Accrued restructuring expenses                                   --               --            (1,619)
                                                                -----------      ----------      -----------
Net Cash Provided By (Used In) Operating Activities                 4,558            5,560          (5,767)
                                                                -----------      ----------      -----------

INVESTING ACTIVITIES
    Purchases of fixed assets                                      (4,902)            (247)           (348)
    Purchases of other assets                                        (418)            (144)           (421)
                                                                -----------      ----------      -----------
Net Cash Used In Investing Activities                              (5,320)            (391)           (769)
                                                                -----------      ----------      -----------
FINANCING ACTIVITIES
    Net payments on short-term bank borrowings                       --               --           (25,256)
    Net proceeds from issuance of term loan                          --               --            15,000
    Principal payments on term loan                                (1,000)          (1,000)           (500)
    Net proceeds from issuance of stock                              --               --            19,001
                                                                -----------      ----------      -----------
Net Cash (Used In) Provided By Financing Activities                (1,000)          (1,000)          8,245
                                                                -----------      ----------      -----------
(Decrease) Increase in Cash and Cash Equivalents                   (1,762)           4,169           1,709
Cash and Cash Equivalents, Beginning of Year                        6,208            2,039             330
                                                                -----------      ----------      -----------
Cash and Cash Equivalents, End of Year                            $ 4,446           $ 6,208        $ 2,039
                                                                ===========      ==========      ===========
Cash paid for:
    Taxes                                                         $   168           $   336        $     8
    Interest                                                      $ 2,149           $ 2,167        $ 4,670

Supplemental schedule of non-cash financing activities:
    Bank debt assumed by principal stockholder and converted
      to subordinated  promissory notes                           $ --              $ --           $12,500
    Exchange of subordinated promissory notes for common stock    $ --              $ --           $40,625
    Issuance of warrants related to new financing agreement       $ --              $ --           $   138
</TABLE>


           See accompanying notes to consolidated financial statements

                                       F-6

<PAGE>


                      BERNARD CHAUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS

     Bernard Chaus, Inc. (the "Company" or "Chaus") designs, arranges for the
manufacture of and markets an extensive range of women's career and casual
sportswear principally under the JOSEPHINE CHAUS(R) COLLECTION, JOSEPHINE
CHAUS(R) STUDIO, JOSEPHINE CHAUS(R) ESSENTIALS, and JOSEPHINE CHAUS(R) SPORT
trademarks. The Company's products are sold nationwide through department store
chains, specialty retailers and other retail outlets.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation:

     The consolidated financial statements include the accounts of the Company
and its subsidiaries. Material intercompany accounts and transactions have been
eliminated.

Use of Estimates:

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Reclassification:

     Certain reclassifications were made to the fiscal 1999 and 1998
Consolidated Financial Statements to conform with the fiscal 2000 presentation.

Earnings Per Share:

     All share and per share data reflects the 1 for 10 reverse stock split
which was effected December 9, 1997. Basic earnings per share has been computed
by dividing the applicable net income by the weighted average number of common
shares outstanding. Diluted earnings per share has been computed by dividing the
applicable net income by the weighted average number of common shares
outstanding and common stock equivalents. The calculation of basic and diluted
earnings per share for fiscal 1998 reflects the retroactive adjustment for the
bonus element of the Rights Offering, which was consummated on January 26, 1998.

Revenue Recognition:

     Revenues are recorded at the time merchandise is shipped, and with regard
to the outlet store at the time when goods are sold to customers.

Credit Terms:

     The Company extends credit to its customers based upon an evaluation of the
customer's financial condition and credit history and generally does not require
collateral. At June 30, 2000 and 1999, approximately 77% and 82%, respectively,
of the Company's accounts receivable were due from department store customers
owned by three single corporate entities. During fiscal 2000, approximately 86%
of the Company's net sales were made to department store customers owned by four
single corporate entities, as compared to 82% in fiscal 1999 and 1998. Sales to
Dillard's Department Stores accounted for 42% of net sales in fiscal 2000, 40%
in fiscal 1999 and 43% in fiscal 1998. Sales to the May Department Stores
Company accounted for approximately 26% of the Company's net sales in fiscal
2000, 28% in fiscal

                                      F-7

<PAGE>

1999 and 29% in fiscal 1998. Sales to TJX Companies, Inc. accounted for
approximately 13% of net sales in fiscal 2000, 7% in fiscal 1999 and 3% in
fiscal 1998. Sales to Federated Department Stores accounted for approximately 5%
of net sales in fiscal 2000 and 7% of net sales in fiscal 1999 and 1998. As a
result of the Company's dependence on its major customers, such customers may
have the ability to influence the Company's business decisions. The loss of or
significant decrease in business from any of its major customers would have a
material adverse effect on the Company's financial position and results of
operations. As of June 30, 2000 and June 30, 1999, Accounts Receivable was net
of allowances of $2.8 million and $1.6 million, respectively.

Cash Equivalents:

     Cash equivalents are short-term, highly liquid investments purchased with
an original maturity of three months or less.

Inventories:

     Inventories are stated at the lower of cost, using the first-in, first-out
method, or market.

Fixed Assets:

     Furniture and equipment are depreciated principally using the straight-line
method over eight years. Leasehold improvements are amortized using the
straight-line method over either the term of the lease or the estimated useful
life of the improvement, whichever period is shorter. Computer hardware and
software is depreciated using the straight-line method over three to five years.

Foreign Currency Transactions:

     The Company negotiates substantially all of its purchase orders with
foreign manufacturers in United States dollars. The Company considers the United
States dollar to be the functional currency of its overseas subsidiaries. All
foreign currency gains and losses are recorded in the Consolidated Statement of
Operations.

Fair Value of Financial Instruments:

     For financial instruments, including cash and cash equivalents, accounts
receivable and payable, accruals and term loans, the carrying amounts
approximated fair value due to their short-term maturity or variable interest
rate.

New Accounting Pronouncements:

     In June 1999, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 138, Accounting for
Derivative Instruments and Certain Hedging Activities. This statement addresses
a limited number of issues causing implementation difficulties for entities
applying SFAS No. 133. SFAS No. 133 requires that an entity recognize all
derivative instruments as either assets or liabilities in the balance sheet and
measure those instruments at fair value. If certain conditions are met, a
derivative may be specifically designated as (i) a hedge of the exposure to
changes in the fair value of a recognized asset or liability or an unrecognized
firm commitment, (ii) a hedge of the exposure to variable cash flows of a
forecasted transaction, or (iii) a hedge of the foreign currency exposure of a
net investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction. The accounting for changes in the fair value of a derivative
depends on the intended use of the derivative and the resulting designation.
This statement is effective for all fiscal quarters of fiscal years beginning
after June 15, 2000. The Company currently has no derivative financial
instruments, and as such, the Company does not expect the standard to have an
impact on its consolidated financial position, liquidity, cash flows or results
of operations.

     In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." This bulletin summarizes certain of the SEC Staff's views in
applying

                                       F-8

<PAGE>

generally accepted accounting principles to revenue recognition in financial
statements. This bulletin, through its subsequent revised releases, SAB No. 101A
and No. 101B, is effective for registrants no later than the fourth fiscal
quarter of fiscal years beginning after December 15, 1999. The Company does not
expect the implementation of this bulletin to have an impact on its consolidated
financial position, liquidity or results of operations.

3. INVENTORIES

                                    June 30,       June 30,
                                      2000           1999
                                  -----------    ------------
                                       (In thousands)
        Finished goods               $12,946         $15,512
        Work-in-process                    0           1,000
        Raw materials                  1,775           2,294
                                  -----------    ------------
                                     $14,721         $18,806
                                  ===========    ============

Inventories include merchandise in transit (principally finished goods) of
approximately $9.3 million at June 30, 2000 and $10.6 million at June 30, 1999.

4. FIXED ASSETS

                                                     June 30,        June 30,
                                                       2000            1999
                                                   -----------     -----------
                                                         (In thousands)
Furniture and equipment                               $12,234         $10,456
Leasehold improvements                                  9,579           6,507
                                                   -----------     -----------
                                                       21,813          16,963
Less accumulated depreciation and amortization         16,644          16,203
                                                   -----------     -----------
                                                    $   5,169       $     760
                                                   ===========     ===========

5. INCOME TAXES

Significant components of the Company's net deferred tax assets are as follows:

                                                         June 30,      June 30,
                                                           2000         1999
                                                        ----------    ---------
                                                             (In thousands)
Deferred tax assets:
  Net federal, state and local operating
    loss carryforwards                                  $   36,900    $  37,200
  Costs capitalized to inventory for tax purposes              900        1,100
  Inventory valuation                                        1,000        1,200
  Excess of book over tax depreciation                       1,900        2,300
  Sales allowances not currently deductible                    800        1,000
  Reserves and other items not currently deductible            800          600
                                                        ----------    ---------
                                                            42,300       43,400
Valuation allowance for deferred tax assets                (42,300)     (43,400)
                                                        ----------    ---------
  Net deferred tax asset                                $        0    $       0
                                                        ==========    =========

                                      F-9

<PAGE>

                                               Fiscal Year Ended June 30,
                                            2000          1999          1998
                                          --------      --------      --------
                                                        (In thousands)
Expense (benefit) for federal income
  taxes at the statutory rate of 35.0%    $    68       $  3,866      $  1,542
  State and local income taxes net of
    federal tax benefit                         0              0            95
  Other                                        47             43            51
  Effects of unrecognized federal tax
    loss carryforwards                       (111)        (3,709)       (1,443)
                                          --------      --------      --------
  Provision for income taxes              $     4       $    200      $    245
                                          ========      ========      ========

At June 30, 2000, the Company has a federal net operating loss carryforward for
income tax purposes of approximately $88.0 million, which will expire between
2008 and 2020.

6. FINANCING AGREEMENTS

     In October 1997, the Company and BNY Financial Corporation ("BNYF"), a
wholly owned subsidiary of General Motors Acceptance Corp. ("GMAC") entered into
a financing agreement (the "Financing Agreement"). The Financing Agreement,
which was amended on June 3, 1998, consists of two facilities: (i) the Revolving
Facility which is a $45.5 million five-year revolving credit line with a $34.0
million sublimit for letters of credit, and (ii) the Term Loan which is a $14.5
million term loan facility. Each facility matures on December 31, 2002. At June
30, 2000, the Company had availability of approximately $6.4 million (inclusive
of overadvance availability) under the Financing Agreement. The Company had no
borrowings at June 30, 2000 under the Revolving Facility.

     Interest on the Revolving Facility accrues at 1/2 of 1% above the Prime
Rate (9.50% at June 30, 2000) and is payable on a monthly basis, in arrears.
Interest on the Term Loan accrues at an interest rate ranging from 1/2 of 1%
above the Prime Rate to 1 1/2% above the Prime Rate, which interest rate will be
determined, from time to time, based upon the Company's availability under the
Revolving Facility

     Amortization payments in the amount of $250,000 are payable quarterly in
arrears in connection with the Term Loan. Eight amortization payments have been
made resulting in a balance of $12.5 million at June 30, 2000. A balloon payment
in the amount of $10.25 million is due on December 31, 2002. In the event of the
earlier termination by the Company of the Financing Agreement, the Company will
be liable for termination fees initially equal to $2.8 million, and declining to
$2.2 million after October 8, 2000. The Company's obligations under the
Financing Agreement are secured by a first priority lien on substantially all of
the Company's assets, including the Company's accounts receivable, inventory and
trademarks.

     The Financing Agreement contains financial covenants requiring, among other
things, the maintenance of minimum levels of tangible net worth, working capital
and minimum permitted profit (maximum permitted loss). The Financing Agreement
also contains certain restrictive covenants which, among other things, limit the
Company's ability to incur additional indebtedness or liens and to pay
dividends. On September 22, 2000, the Financing Agreement was amended to
establish certain financial covenants for the years ending June 30, 2000 and
June 30, 2001.

7. STOCK EXCHANGE LISTING REQUIREMENTS

     The Company received a notice from the New York Stock Exchange (the "NYSE")
in March 2000, that based upon new continued listing requirements adopted by the
NYSE, the Company was below NYSE criteria in respect of requirements that total
market capitalization be not less than $50 million and stockholders' equity be
not less than $50 million. As of June 30, 2000, the Company's stockholders'
equity was approximately $18.3 million and its total market capitalization was
approximately $18.7 million. On May 19, 2000, the Company submitted to the NYSE
a business plan for attaining compliance with the new listing standards over the
18 month period ending September 30, 2001. In July 2000, the NYSE accepted the
Company's 18 month plan for attaining compliance with the new continued listing
requirements and indicated that the Company would be monitored on a quarterly
basis by the NYSE for compliance with the plan. Should the Company fall out of
compliance, the Company would be subject to delisting of its common stock from
the NYSE. On July 21, 2000, the NYSE notified the Company that failure to
restore the price of its common stock above $1.00 (based upon a 30-day average)
within six months of the notification would result in the delisting of its
common stock. On September 28, 2000, the Company announced that it is seeking a
quotation of its shares of common stock on the OTC Bulletin Board in lieu of its
NYSE listing. NYSE trading is expected to be discontinued effective prior to the
opening of trading on October 6, 2000. After such date, the Company's common
stock will be traded in the over the counter market and quotations are expected
to be available on the OTC Bulletin Board. The Company is unable to predict the
effect, if any, of the delisting on the market for and liquidity of its common
stock which will depend upon, among other factors, the availability of market
makers for the stock.

                                      F-10

<PAGE>


8. EMPLOYEE BENEFIT PLANS

Pension Plan:

     Pursuant to a collective bargaining agreement, all of the Company's union
employees are covered by a defined benefit pension plan. Pension expense
amounted to approximately $61,000, $122,000 and $40,000 in fiscal 2000, 1999 and
1998, respectively. As of December 31, 1999, the actuarial present value of the
accumulated vested and non-vested plan benefits amounted to $0.7 million and net
assets available for benefits amounted to $1.0 million. Actuarial assumptions
related to weighted average interest rate were 8.5% for 2000, 1999 and 1998.

Savings Plan:

     The Company has a savings plan (the "Savings Plan") under which eligible
employees may contribute a percentage of their compensation and the Company
(subject to certain limitations) will match 50% of the employee's contribution.
Company contributions will be invested half in the Common Stock of the Company
and half in investment funds selected by the participant and are subject to
vesting provisions of the Savings Plan. Expense under the Savings Plan was
approximately $0.3 million in fiscal 2000, $0.1 million in fiscal 1999 and $0.2
million in fiscal 1998. An aggregate of 10,000 shares of Common Stock has been
reserved for issuance under the Savings Plan.

Stock Option Plan:

     On February 23,1998, the Company cancelled all options granted under the
Company's 1986 stock option plan and reissued the holders of such options with
an equivalent number of options (at fair market value) under the Company's 1998
Stock Option Plan (the "Option Plan"). Pursuant to the Option Plan, the Company
may grant to eligible individuals incentive stock options, as defined in the
Internal Revenue Code, and non-incentive stock options. Under the Option Plan,
2,711,591 shares of Common Stock were reserved for issuance. No stock options
may be granted subsequent to November 2007 and the exercise price may not be
less than 100% of the fair market value on the date of grant for incentive stock
options.

     At June 30, 2000, a total of approximately 2,721,591 shares of Common Stock
were reserved for issuance under the Stock Option Plan and the Savings Plan.
Information regarding the Company's stock options is summarized below:

                                      F-11

<PAGE>


                                           Non-Incentive Stock Options
                                ------------------------------------------------
                                                                     Weighted
                                   Number         Exercise           Average
                                 of Shares       Price Range      Exercise Price
                                -----------   -----------------   --------------
Outstanding at July 1, 1997        419,476     $18.75 - $56.25        $38.40
Options granted                  2,616,407     $ 3.11 - $ 3.11        $ 3.11
Options canceled                  (419,476)    $18.75 - $56.25        $38.40
                                -----------
Outstanding at June 30, 1998     2,616,407     $ 3.11 - $ 3.11        $ 3.11
Options granted                    775,000     $ 2.13 - $ 3.50        $ 2.20
Options canceled                (1,557,069)    $ 3.11 - $ 3.11        $ 3.11
                                -----------
Outstanding at June 30, 1999     1,834,338     $ 2.13 - $ 3.50        $ 2.73
Options granted                    893,167     $ 1.25 - $ 3.00        $ 2.38
Options canceled                  (546,195)    $ 2.13 - $ 3.11        $ 2.55
                                -----------
Outstanding at June 30, 2000     2,181,310     $ 1.25 - $ 3.50        $ 2.63
                                ===========   =================   ==============

     Most outstanding stock options are exercisable over four years in annual
25% increments. Certain stock options issued on February 11, 1999 and
outstanding on June 30, 2000 (400,000) were fully exercisable on June 30, 2000.
As of June 30, 2000, options to purchase approximately 849,000 shares at a
weighted average exercise price of $2.64 were exercisable.

Stock Based Compensation:

     All stock options are granted at fair market value of the Common Stock at
grant date. The weighted average fair value of stock options granted during
2000, 1999 and 1998 was $1.75, $2.04 and $2.76 respectively. The fair value of
each option is estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions used for the
grants: risk-free interest rate of 6.25%, 5.59% and 5.49% in 2000, 1999 and
1998, respectively; expected dividend yield of 0% in 2000, 1999 and 1998;
expected life of 3.34, 2.33 and 2.40 years in 2000, 1999 and 1998, respectively;
and expected volatility of 120.55%, 232.13% and 237.06% in 2000, 1999 and 1998,
respectively. The outstanding stock options have a weighted average contractual
life of 8.53 years, 8.98 years and 9.60 years in 2000, 1999 and 1998,
respectively. The number of stock options exercisable at June 30, 2000, 1999 and
1998 were 849,000, 285,000 and 714,000, respectively.

     The Company accounts for the stock option plans in accordance with the
Accounting Principles Board Opinion No. 25, under which no compensation cost is
recognized for stock option awards. Had compensation cost been determined
consistent with Statement of Financial Accounting Standard No. 123, "Accounting
for Stock-Based Compensation" ("SFAS 123"), the Company's pro forma net
(loss)/income for 2000, 1999 and 1998 would have been ($1,011), $8,564 and
$2,318, respectively. The Company's pro forma net (loss)/income per share for
2000, 1999 and 1998 would have been ($0.04), $0.31 and $0.15, respectively.
Because the SFAS 123 method of accounting has not been applied to options
granted prior to 1995, the resulting pro forma compensation cost may not be
representative of that to be expected in future years.

                                      F-12

<PAGE>

9. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

Lease Obligations:

     The Company leases showroom, distribution and office facilities, and
equipment under various noncancellable operating lease agreements which expire
through 2009. Rental expense for the years ended June 30, 2000, 1999 and 1998
was approximately $2.7 million, $2.4 million and $3.2 million, respectively.

     The minimum aggregate rental commitments at June 30, 2000 are as follows
(in thousands):

            Fiscal year ending:

            2001..........................        $ 2,415
            2002..........................          2,346
            2003..........................          2,300
            2004..........................          2,254
            2005..........................          1,065
            Subsequent to 2005............          4,236
                                                  ========
                                                  $14,616
                                                  ========

Letters of Credit:

     The Company is contingently liable under letters of credit issued by banks
to cover contractual commitments for merchandise purchases of approximately
$19.3 million at June 30, 2000.

Litigation:

     By Demand for Arbitration filed on June 9, 1999, the former chief executive
officer of the Company, Andrew Grossman, commenced an arbitration before the
American Arbitration Association ("AAA") in New York alleging breach of his
employment contract. By Award of Arbitrators (the "Award") dated June 30, 2000,
a panel of the AAA awarded Mr. Grossman a portion of the relief he had
requested. Pursuant to the Award, the Company paid Mr. Grossman $848,347 (less
applicable withholding taxes) on July 25, 2000. The Company made two additional
payments of $83,333 each (less applicable withholding taxes) on July 31, 2000
and August 31, 2000. The Award further provides that Mr. Grossman is to receive
net profit participation of 2.5% of the annual net profit (as that term is
defined in the employment contract between Mr. Grossman and the Company) of the
Company for the fiscal year ended June 30, 2000 upon filing of the Company's
fiscal year 2000 Form 10-K report. In fiscal 2000 and 1999, the Company had
accrued $0.6 million and $0.5 million, respectively, pursuant to the employment
contract. Mr. Grossman is to also receive net profit participation of .4166% of
the annual net profit (as that term is defined in the employment contract
between Mr. Grossman and the Company) for the fiscal year ended June 30, 2001
upon filing of the Company's fiscal year 2001 Form 10-K report.


                                      F-13

<PAGE>


                                                                     SCHEDULE II

                       BERNARD CHAUS, INC. & SUBSIDIARIES
                        VALUATION AND QUALIFYING ACCOUNTS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                      Additions
                                                      Balance at      Charged to
                                                     Beginning of     Costs and                     Balance at End
Description                                              Year          Expenses      Deductions        of Year
<S>                                                  <C>             <C>           <C>             <C>
Year ended June 30, 2000
  Allowance for doubtful accounts                      $    366       $    138      $     97 (1)      $    407

  Reserve for customer allowances and deductions       $  1,245       $ 17,618      $ 16,498 (2)      $  2,365
                                                      ----------     ----------    --------------    ----------
Year ended June 30, 1999
  Allowance for doubtful accounts                      $    368       $     68      $     70 (1)      $    366
                                                      ----------     ----------    --------------    ----------
  Reserve for customer allowances and deductions       $  2,834       $ 12,074      $ 13,663 (2)      $  1,245
                                                      ----------     ----------    --------------    ----------

Year ended June 30, 1998
  Allowance for doubtful accounts                      $    341       $    (65)     $    (92)(1)      $    368
                                                      ----------     ----------    --------------    ----------
  Reserve for customer allowances and deductions       $  1,751       $  8,054      $  6,971 (2)      $  2,834
                                                      ----------     ----------    --------------    ----------
  Accrued restructuring expenses                       $  1,850       $   --        $  1,850 (3)      $   --
                                                      ----------     ----------    --------------    ----------
</TABLE>

-------------

(1) Uncollectible accounts written off

(2) Allowances charged to reserve and granted to customers

(3) Expenses charged to reserve


                                      S-1