##### 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 December 31, 2009.
 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
  o Large accelerated filer
    
    o Accelerated filer
    
    o Non-accelerated filer
    
    þ Smaller reporting company(Do not check if a smaller reporting company)
 o þ
  Date
    
    Class
    
    Shares OutstandingFebruary 16, 2010
    
    Common Stock, $0.01 par value
    
    
    37,481,373




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##### 



PART I FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements (Unaudited)
    
    PAGEConsolidated Balance Sheets as of December 31, 2009,
June 30, 2009 and December 31, 2008
    
    
    3Consolidated Statements of Operations for the
Three and Six Months Ended December 31, 2009 and 2008
    
    
    4Consolidated Statements of Cash Flows for the
Six Months Ended December 31, 2009 and 2008
    
    
    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
    
    
    19Item 4. Controls and Procedures
    
    
    20PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    21Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3. Defaults Upon Senior Securities
    
    
    21Item 4. Submission of Matters to a Vote of Security Holders
    
    
    21Item 5. Other Information
    
    
    21Item 6. Exhibits
    
    
    22SIGNATURES
    
    
    23EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 BERNARD CHAUS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  December 31,
    
    
    June 30,
    
    
    December 31,2009
    
    
    2009
    
    
    2008(Unaudited)
    
    
    ( * )
    
    
    (Unaudited)AssetsCurrent AssetsCash
    
    $
    149
    
    
    $
    126
    
    
    $
    82Accounts receivable  factored
    
    
    13,443
    
    
    
    10,589
    
    
    
    16,478Accounts receivable  net
    
    
    907
    
    
    
    207
    
    
    
    144Inventories  net
    
    
    4,187
    
    
    
    3,839
    
    
    
    11,249Prepaid expenses and other current assets
    
    
    532
    
    
    
    275
    
    
    
    733Total current assets
    
    
    19,218
    
    
    
    15,036
    
    
    
    28,686Fixed assets  net
    
    
    746
    
    
    
    857
    
    
    
    1,650Other assets
    
    
    91
    
    
    
    158
    
    
    
    190Trademarks
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Goodwill
    
    
    
    
    
    
    
    
    
    
    2,257Total assets
    
    $
    21,055
    
    
    $
    17,051
    
    
    $
    33,783Liabilities and Stockholders Equity (Deficiency)Current LiabilitiesRevolving credit borrowings
    
    $
    7,762
    
    
    $
    6,606
    
    
    $
    14,984Accounts payable
    
    
    8,559
    
    
    
    6,251
    
    
    
    8,016Accrued expenses
    
    
    2,392
    
    
    
    2,164
    
    
    
    2,658Total current liabilities
    
    
    18,713
    
    
    
    15,021
    
    
    
    25,658Deferred income
    
    
    3,433
    
    
    
    
    
    
    
    Long term liabilities
    
    
    1,556
    
    
    
    1,295
    
    
    
    602Deferred income taxes
    
    
    161
    
    
    
    147
    
    
    
    506Total liabilities
    
    
    23,863
    
    
    
    16,463
    
    
    
    26,766Stockholders Equity (Deficiency)Preferred 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
December 31, 2009, June 30, 2009
and December 31, 2008
    
    
    375
    
    
    
    375
    
    
    
    375Additional paid-in capital
    
    
    133,434
    
    
    
    133,416
    
    
    
    133,395Deficit
    
    
    (134,208
    )
    
    
    (130,794
    )
    
    
    (124,672
    )Accumulated other comprehensive loss
    
    
    (929
    )
    
    
    (929
    )
    
    
    (601
    )Less: Treasury stock at cost 
62,270 shares at December 31 2009, June
30, 2009 and December 31, 2008
    
    
    (1,480
    )
    
    
    (1,480
    )
    
    
    (1,480
    )Total stockholders equity (deficiency)
    
    
    (2,808
    )
    
    
    588
    
    
    
    7,017Total liabilities and stockholders
equity (deficiency)
    
    $
    21,055
    
    
    $
    17,051
    
    
    $
    33,783
 
 *
    
    Derived from audited financial statements at June 30, 2009.  3




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BERNARD CHAUS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
  For the Three Months Ended
    
    
    For the Six Months EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)
    
    
    (Unaudited)Net revenue
    
    $
    21,097
    
    
    $
    26,049
    
    
    $
    44,807
    
    
    $
    59,947Cost of goods sold
    
    
    16,396
    
    
    
    20,426
    
    
    
    33,635
    
    
    
    44,356Gross profit
    
    
    4,701
    
    
    
    5,623
    
    
    
    11,172
    
    
    
    15,591Selling, general and administrative expenses
    
    
    6,955
    
    
    
    8,882
    
    
    
    14,206
    
    
    
    18,461Loss from operations
    
    
    (2,254
    )
    
    
    (3,259
    )
    
    
    (3,034
    )
    
    
    (2,870
    )Interest expense, net
    
    
    207
    
    
    
    289
    
    
    
    360
    
    
    
    522Loss before income tax provision
    
    
    (2,461
    )
    
    
    (3,548
    )
    
    
    (3,394
    )
    
    
    (3,392
    )Income tax provision
    
    
    10
    
    
    
    33
    
    
    
    20
    
    
    
    63Net loss
    
    $
    (2,471
    )
    
    $
    (3,581
    )
    
    $
    (3,414
    )
    
    $
    (3,455
    )Basic loss per share
    
    $
    (0.07
    )
    
    $
    (0.10
    )
    
    $
    (0.09
    )
    
    $
    (0.09
    )Diluted loss per share
    
    $
    (0.07
    )
    
    $
    (0.10
    )
    
    $
    (0.09
    )
    
    $
    (0.09
    )Weighted average number of shares
outstanding- basic
    
    
    37,481,000
    
    
    
    37,481,000
    
    
    
    37,481,000
    
    
    
    37,481,000Weighted average number of common and
common equivalent shares outstanding-
diluted
    
    
    37,481,000
    
    
    
    37,481,000
    
    
    
    37,481,000
    
    
    
    37,481,000
  4




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BERNARD CHAUS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Six Months EndedDecember 31,
    
    
    December 31,2009
    
    
    2008(Unaudited)Operating ActivitiesNet loss
    
    $
    (3,414
    )
    
    $
    (3,455
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation and amortization
    
    
    413
    
    
    
    614Amortization of deferred income
    
    
    (167
    )
    
    
    Gain from insurance recovery
    
    
    
    
    
    
    (384
    )Proceeds from insurance recovery
    
    
    
    
    
    
    92Stock compensation expense
    
    
    18
    
    
    
    22Deferred income taxes
    
    
    14
    
    
    
    44Changes in operating assets and liabilities:Accounts receivable  factored
    
    
    (2,854
    )
    
    
    (15,639
    )Accounts receivable
    
    
    (700
    )
    
    
    13,206Inventories
    
    
    (348
    )
    
    
    (3,767
    )Prepaid expenses and other current assets
    
    
    (226
    )
    
    
    (132
    )Accounts payable
    
    
    2,308
    
    
    
    1,172Accrued expenses and long term liabilities
    
    
    89
    
    
    
    289Net cash used in operating activities
    
    
    (4,867
    )
    
    
    (7,938
    )Investing ActivitiesPurchases of fixed assets
    
    
    (266
    )
    
    
    (194
    )Proceeds from insurance recovery
    
    
    
    
    
    
    192Net cash used in investing activities
    
    
    (266
    )
    
    
    (2
    )Financing ActivitiesNet proceeds from revolving credit borrowings
    
    
    1,156
    
    
    
    8,386Proceeds from supply premium
    
    
    4,000
    
    
    
    Principal payments on term loan
    
    
    
    
    
    
    (425
    )Net cash provided by financing activities
    
    
    5,156
    
    
    
    7,961Increase in cash
    
    
    23
    
    
    
    21Cash beginning of period
    
    
    126
    
    
    
    61Cash end of period
    
    $
    149
    
    
    $
    82Supplemental Disclosure of Cash Flow Information:Cash paid for:Taxes
    
    $
    13
    
    
    $
    21Interest
    
    $
    329
    
    
    $
    456
    5




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Business:
 ® ® ® ® ® ®
   6




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Basis of Presentation:
  Subsequent Events:
  Principles of Consolidation:
  Use of Estimates:
  Revenue Recognition:
  Factoring Agreement and Accounts Receivable:
  7




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




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Earnings (Loss) Per Share
  For the Three Months Ended
    
    
    For the Six Months EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Denominator for loss per share (in millions):Denominator for basic loss per share
weighted-average shares outstanding
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5Assumed exercise of potential common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted loss per share
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5
  Fair Value of Financial Instruments:
  New Accounting Pronouncements:
   9




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December 31,
    
    
    June 30,
    
    
    December 31,2009
    
    
    2009
    
    
    2008(in thousands)(unaudited)
    
    
    (*)
    
    
    (unaudited)Raw materials
    
    $
    416
    
    
    $
    306
    
    
    $
    339Work-in-process
    
    
    115
    
    
    
    71
    
    
    
    75Finished goods
    
    
    3,656
    
    
    
    3,462
    
    
    
    10,835Total
    
    $
    4,187
    
    
    $
    3,839
    
    
    $
    11,249
 
 *
    
    Derived from the audited financial statements at June 30, 2009.     10




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Factoring Agreement:
   11




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For the Three Months Ended
    
    
    For the Six Months EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)
    
    
    (Unaudited)(In Thousands)
    
    
    (In Thousands)Service cost
    
    $
    2
    
    
    $
    4
    
    
    $
    4
    
    
    $
    8Interest cost
    
    
    28
    
    
    
    28
    
    
    
    56
    
    
    
    56Expected return on plan assets
    
    
    (26
    )
    
    
    (32
    )
    
    
    (52
    )
    
    
    (64
    )Amortization of net loss
    
    
    20
    
    
    
    11
    
    
    
    40
    
    
    
    22Net periodic benefit cost
    
    $
    24
    
    
    $
    11
    
    
    $
    48
    
    
    $
    22
   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 Ended
    
    
    For the Six Months EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Net Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross Profit
    
    
    22.3
    %
    
    
    21.6
    %
    
    
    24.9
    %
    
    
    26.0
    %Selling, general and administrative expenses
    
    
    33.0
    %
    
    
    34.1
    %
    
    
    31.7
    %
    
    
    30.8
    %Interest expense
    
    
    1.0
    %
    
    
    1.1
    %
    
    
    0.8
    %
    
    
    0.9
    %Net loss
    
    
    (11.7
    )%
    
    
    (13.7
    )%
    
    
    (7.6
    )%
    
    
    (5.8
    )%
   14




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15




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Financial Position, Liquidity and Capital Resources
 General
    Financing Agreement
     16




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Factoring Agreement
   Future Financing Requirements
  17




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Critical Accounting Policies and Estimates
    18




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
   19




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Item 4. Controls and Procedures
    20




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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.
 (a)
    
    The Annual Meeting of Stockholders of the Company was held on November 10, 2009
at 11:00 a.m.(c)
    
    At such meeting, the Stockholders voted on the election of five directors of the
Company to serve until the next Annual Meeting of Stockholders and until their
respective successors have been elected and qualified.
 For
    
    
    
    WithheldPhilip G. Barach
    
    
    36,503,518
    
    
    
    445,145Josephine Chaus
    
    
    36,517,827
    
    
    
    430,836Robert Flug
    
    
    36,503,466
    
    
    
    445,197Harvey M. Krueger
    
    
    36,503,330
    
    
    
    445,333David Stiffman
    
    
    36,503,466
    
    
    
    445,197
 
 Item 5. Other Information.
  21




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Item 6. Exhibits.
 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 Officer and Chief 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 Officer and Chief Financial Officer of Bernard Chaus, Inc.
 22




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SIGNATURES
  BERNARD CHAUS, INC.Date: February 16, 2010
    By:
    /s/ Josephine ChausJOSEPHINE CHAUSChairwoman of the Board and
Chief Executive OfficerDate: February 16, 2010
    By:
    /s/ David StiffmanDAVID STIFFMANChief Operating Officer and
Chief Financial Officer 23




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Exhibit Number
    
    Exhibit Title31.1
    
    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 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 Officer and Chief
Financial Officer of Bernard Chaus, Inc.
 24