##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the quarterly period ended October 2, 2010.
 OR
 o
    
    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.
  New York
    
    13-2807386(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. employer identification number)
 530 Seventh Avenue, New York, New York
    
    10018(Address of Principal Executive Offices)
    
    (Zip Code)
 (Registrants telephone number, including area code)
 
  þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
  Date
    
    Class
    
    Shares OutstandingNovember 22, 2010
    
    Common Stock, $0.01 par value
    
    37,481,373




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##### 



PAGEPART I FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements (Unaudited)Consolidated Balance Sheets as of October 2, 2010,
July 3, 2010 and September 30, 2009
    
    
    3Consolidated Statements of Operations for the
Three Months Ended October 2, 2010 and September 30, 2009
    
    
    4Consolidated Statements of Cash Flows for the
Three Months Ended October 2, 2010 and September 30,2009
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4. Controls and Procedures
    
    
    18PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    19Item 1A. Risk Factors
    
    
    19Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3. Defaults Upon Senior Securities
    
    
    19Item 4. Submission of Matters to a Vote of Security Holders
    
    
    19Item 5. Other Information
    
    
    19Item 6. Exhibits
    
    
    20SIGNATURES
    
    
    21EX-10.6EX-31.1EX-31.2EX-32.1EX-32.2
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 BERNARD CHAUS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  October 2,
    
    
    July 3,
    
    
    September 30,2010
    
    
    2010
    
    
    2009(Unaudited)
    
    
    ( * )
    
    
    (Unaudited)AssetsCurrent AssetsCash
    
    $
    3
    
    
    $
    4
    
    
    $
    2,840Accounts receivable  factored
    
    
    18,793
    
    
    
    19,404
    
    
    
    15,471Accounts receivable  net
    
    
    2,568
    
    
    
    1,789
    
    
    
    1,214Inventories  net
    
    
    8,785
    
    
    
    8,846
    
    
    
    6,133Prepaid expenses and other current assets
    
    
    498
    
    
    
    536
    
    
    
    586Total current assets
    
    
    30,647
    
    
    
    30,579
    
    
    
    26,244Fixed assets  net
    
    
    920
    
    
    
    885
    
    
    
    818Other assets
    
    
    7
    
    
    
    25
    
    
    
    100Trademarks
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Total assets
    
    $
    32,574
    
    
    $
    32,489
    
    
    $
    28,162Liabilities and Stockholders DeficiencyCurrent LiabilitiesRevolving credit borrowings
    
    $
    9,990
    
    
    $
    11,175
    
    
    $
    11,476Accounts payable
    
    
    20,732
    
    
    
    19,399
    
    
    
    9,136Accrued expenses
    
    
    1,353
    
    
    
    2,305
    
    
    
    2,726Total current liabilities
    
    
    32,075
    
    
    
    32,879
    
    
    
    23,338Deferred income
    
    
    3,135
    
    
    
    3,234
    
    
    
    3,534Long term liabilities
    
    
    1,773
    
    
    
    1,735
    
    
    
    1,486Deferred income taxes
    
    
    180
    
    
    
    173
    
    
    
    154Total liabilities
    
    
    37,163
    
    
    
    38,021
    
    
    
    28,512Stockholders DeficiencyPreferred stock, $.01 par value, authorized shares
  1,000,000; issued and outstanding
shares  none
    
    
    
    
    
    
    
    
    
    
    Common stock, $.01 par value,
authorized shares  50,000,000; issued shares
  37,543,643 at October 2,
2010, July 3,2010 and
September 30, 2009
    
    
    375
    
    
    
    375
    
    
    
    375Additional paid-in capital
    
    
    133,441
    
    
    
    133,440
    
    
    
    133,421Deficit
    
    
    (135,885
    )
    
    
    (136,827
    )
    
    
    (131,737
    )Accumulated other comprehensive loss
    
    
    (1,040
    )
    
    
    (1,040
    )
    
    
    (929
    )Less: Treasury stock at cost 
62,270 shares at October 2, 2010, July 3, 2010 and
September 30, 2009
    
    
    (1,480
    )
    
    
    (1,480
    )
    
    
    (1,480
    )Total stockholders deficiency
    
    
    (4,589
    )
    
    $
    (5,532
    )
    
    
    (350
    )Total liabilities and stockholders deficiency
    
    $
    32,574
    
    
    $
    32,489
    
    
    $
    28,162
 
 *
    
    Derived from audited financial statements at July 3, 2010.  3




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BERNARD CHAUS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
  For the Three Months EndedOctober 2,
    
    
    September 30,2010
    
    
    2009(Unaudited)
    
    
    (Unaudited)Net revenue
    
    $
    27,716
    
    
    $
    23,710Cost of goods sold
    
    
    21,123
    
    
    
    17,239Gross profit
    
    
    6,593
    
    
    
    6,471Selling, general and administrative expenses
    
    
    7,295
    
    
    
    7,251Accrued gain on early termination of
license agreement
    
    
    (1,857
    )
    
    
    Income (loss) from operations
    
    
    1,155
    
    
    
    (780
    )Interest expense
    
    
    201
    
    
    
    153Income (loss) before income tax provision
    
    
    954
    
    
    
    (933
    )Income tax provision
    
    
    12
    
    
    
    10Net income (loss)
    
    $
    942
    
    
    $
    (943
    )Basic earnings (loss) per share
    
    $
    0.03
    
    
    $
    (0.03
    )Diluted earnings (loss) per share
    
    $
    0.03
    
    
    $
    (0.03
    )Weighted average number of common shares
outstanding- basic
    
    
    37,481,000
    
    
    
    37,481,000Weighted average number of common and
common equivalent shares outstanding-
diluted
    
    
    37,481,000
    
    
    
    37,481,000
  4




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BERNARD CHAUS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Three  Months EndedOctober 2,
    
    
    September 30,2010
    
    
    2009(Unaudited)
    
    
    (Unaudited)Operating ActivitiesNet income (loss)
    
    $
    942
    
    
    $
    (943
    )Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    89
    
    
    
    192Amortization of deferred income
    
    
    (99
    )
    
    
    (66
    )Stock compensation expense
    
    
    1
    
    
    
    5Deferred rent expense
    
    
    26
    
    
    
    166Deferred income taxes
    
    
    7
    
    
    
    7Changes in operating assets and liabilities:Accounts receivable  factored
    
    
    611
    
    
    
    (4,608
    )Accounts receivable
    
    
    (779
    )
    
    
    (1,281
    )Inventories
    
    
    61
    
    
    
    (2,294
    )Prepaid expenses and other assets
    
    
    38
    
    
    
    (267
    )Accounts payable
    
    
    1,333
    
    
    
    2,885Accrued expenses and long term liabilities
    
    
    (940
    )
    
    
    187Net cash provided by (used in) operating activities
    
    
    1,290
    
    
    
    (6,017
    )Investing ActivitiesPurchases of fixed assets
    
    
    (106
    )
    
    
    (139
    )Cash used in investing activities
    
    
    (106
    )
    
    
    (139
    )Financing ActivitiesNet proceeds (payments) from revolving credit
borrowings
    
    
    (1,185
    )
    
    
    4,870Proceeds from supply agreement
    
    
    
    
    
    
    4,000Net cash provided by (used in) financing activities
    
    
    (1,185
    )
    
    
    8,870Increase (decrease) in cash
    
    
    (1
    )
    
    
    2,714Cash, beginning of year
    
    
    4
    
    
    
    126Cash, end of year
    
    $
    3
    
    
    $
    2,840Supplemental Disclosure of Cash Flow Information:Cash paid for:Taxes
    
    $
    14
    
    
    $
    13Interest
    
    $
    182
    
    
    $
    139
 5




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Business:
 ® ® ® ® ® ® ® ®
   6




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Basis of Presentation:
  Fiscal Year:
 th th
 Principles of Consolidation:
  Use of Estimates:
  Revenue Recognition:
  Factoring Agreement and Accounts Receivable:
  7




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Inventories:
  Long-Lived Assets and Trademarks:
  Income Taxes:
  8




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Earnings (Loss) Per Share
  For the Three Months EndedOctober 2,
    
    
    September 30,2010
    
    
    2009Denominator for earnings (loss) per share (in millions):Denominator for basic earnings (loss) per share
weighted-average shares outstanding
    
    
    37.5
    
    
    
    37.5Assumed exercise of potential common shares
    
    
    
    
    
    
    Denominator for diluted earnings (loss) per share
    
    
    37.5
    
    
    
    37.5
  Fair Value of Financial Instruments:
  New Accounting Pronouncements:
   9




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October 2,
    
    
    July 3,
    
    
    September 30,2010
    
    
    2010
    
    
    2009(in thousands)(unaudited)
    
    
    (*)
    
    
    (unaudited)Raw materials
    
    $
    399
    
    
    $
    457
    
    
    $
    257Work-in-process
    
    
    46
    
    
    
    63
    
    
    
    28Finished goods
    
    
    8,340
    
    
    
    8,326
    
    
    
    5,848Total
    
    $
    8,785
    
    
    $
    8,846
    
    
    $
    6,133
 
 *
    
    Derived from the audited financial statements at July 3, 2010.        10




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Factoring Agreement
      Pension PlanFor the Three Months EndedOctober 2,
    
    
    September 30,2010
    
    
    2009(Unaudited)(In Thousands)Service cost
    
    $
    2
    
    
    $
    2Interest cost
    
    
    28
    
    
    
    28Expected return on plan assets
    
    
    (26
    )
    
    
    (26
    )Amortization of net loss
    
    
    9
    
    
    
    20Net periodic benefit cost
    
    $
    13
    
    
    $
    24
   11




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Fiscal year ending:
    
    Amount(in thousands)2011
    
    $
    02012
    
    
    2,1402013
    
    
    1,3502014
    
    
    1,6352015
    
    
    1,8602016
    
    
    975Total
    
    $
    7,960
 12




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Forward-looking Statements
     Overview
 ® ® ® ® ® ® ® ®
  13




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Exclusive Supply Agreement
  Results of Operations
  For the Three Months EndedOctober 2,
    
    September 30,2010
    
    2009Net revenue
    
    
    100.00
    %
    
    
    100.00
    %Gross profit
    
    
    23.8
    %
    
    
    27.3
    %Selling, general and administrative expenses
    
    
    26.3
    %
    
    
    30.6
    %Accrued gain on early termination of license
agreement
    
    
    (6.7
    )%
    
    
    Interest expense
    
    
    0.7
    %
    
    
    0.6
    %Net income (loss)
    
    
    3.4
    %
    
    
    (4.0
    )%
   14




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Financial Position, Liquidity and Capital Resources
 General
   15




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Financing Agreement
     Factoring Agreement
  Future Financing Requirements
  16




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Critical Accounting Policies and Estimates
     17




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4. Controls and Procedures
  18




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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  19




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Item 6. Exhibits (filed herewith)
 10.6
    
    Trademark License Agreement, dated November 18, 2010, between Bernard Chaus, Inc. and Camuto
Consulting, Inc. d/b/a Camuto Group (filed in redacted form since confidential treatment was
requested pursuant to Rule 24b-2 for certain portions thereof).31.1
    
    Certification of Chief Executive Officer pursuant to Rule13a-14(a) or 15d-14(a) of
the Securities Exchange Act of 1934, as amended, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Operating and Financial Officer pursuant to Rule13a-14(a) or
15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, executed by Josephine Chaus,
Chairwoman of the Board and Chief Executive Officer of Bernard Chaus, Inc.32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, executed by David Stiffman, Chief
Operating and Financial Officer of Bernard Chaus, Inc.
 20




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SIGNATURES
  BERNARD CHAUS, INC.Date: November 22, 2010
    By:
    /s/ Josephine ChausJOSEPHINE CHAUSChairwoman of the Board, and 
     Chief Executive OfficerDate: November 22, 2010
    By:
    /s/ David StiffmanDAVID STIFFMANChief Operating and 
     Financial Officer 21




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Exhibit Number
    
    Exhibit Title10.6
    
    Trademark License Agreement, dated November 18, 2010, between
Bernard Chaus, Inc. and Camuto Consulting, Inc. d/b/a Camuto
Group (filed in redacted form since confidential treatment was
requested pursuant to Rule 24b-2 for certain portions thereof).31.1
    
    Certification of Chief Executive Officer pursuant to
Rule13a-14(a) or 15d-14(a) of the Securities Exchange Act of
1934, as amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Operating and Financial Officer pursuant
to Rule13a-14(a) or 15d-14(a) of the Securities Exchange Act of
1934, as amended, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
executed by Josephine Chaus, Chairwoman of the Board and Chief
Executive Officer of Bernard Chaus, Inc.32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
executed by David Stiffman, Chief Operating and Financial
Officer of Bernard Chaus, Inc.
 22