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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 September 30, 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
(Address of Principal Executive Offices)
    
    10018
(Zip Code)
 (212) 354-1280
 
 þ o
 o o
  Large accelerated filer oAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company þ o þ
  Date
    
    Class
    
    Shares OutstandingNovember 9, 2009
    
    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 September 30, 2009,
June 30, 2009 and September 30, 2008
    
    
    3Consolidated Statements of Operations for the
Three Months Ended September 30, 2009 and 2008
    
    
    4Consolidated Statements of Cash Flows for the
Three Months Ended September 30, 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
    
    
    19PART II OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    20Item 1A.
    
    Risk Factors
    
    
    20Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 3.
    
    Defaults Upon Senior Securities
    
    
    20Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    20Item 5.
    
    Other Information
    
    
    20Item 6.
    
    Exhibits
    
    
    20SIGNATURES
    
    
    21EX-10.1EX-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
 September 30,
    
    
    June 30,
    
    
    September 30,2009
    
    
    2009
    
    
    2008(Unaudited)
    
    
    ( * )
    
    
    (Unaudited)AssetsCurrent AssetsCash
    
    $
    2,840
    
    
    $
    126
    
    
    $
    65Accounts receivable  factored
    
    
    15,197
    
    
    
    10,589
    
    
    
    885Accounts receivable  net
    
    
    1,488
    
    
    
    207
    
    
    
    23,320Inventories  net
    
    
    6,133
    
    
    
    3,839
    
    
    
    8,154Prepaid expenses and other current assets
    
    
    586
    
    
    
    275
    
    
    
    758Total current assets
    
    
    26,244
    
    
    
    15,036
    
    
    
    33,182Fixed assets  net
    
    
    818
    
    
    
    857
    
    
    
    1,865Other assets
    
    
    100
    
    
    
    158
    
    
    
    112Trademarks
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Goodwill
    
    
    
    
    
    
    
    
    
    
    2,257Total assets
    
    $
    28,162
    
    
    $
    17,051
    
    
    $
    38,416Liabilities and Stockholders Equity (Deficiency)Current LiabilitiesRevolving credit borrowings
    
    $
    11,476
    
    
    $
    6,606
    
    
    $
    16,078Accounts payable
    
    
    9,136
    
    
    
    6,251
    
    
    
    7,480Accrued expenses
    
    
    2,726
    
    
    
    2,164
    
    
    
    3,426Total current liabilities
    
    
    23,338
    
    
    
    15,021
    
    
    
    26,984Deferred income
    
    
    3,534
    
    
    
    
    
    
    
    Long term liabilities
    
    
    1,486
    
    
    
    1,295
    
    
    
    358Deferred income taxes
    
    
    154
    
    
    
    147
    
    
    
    484Total liabilities
    
    
    28,512
    
    
    
    16,463
    
    
    
    27,826Stockholders 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 September 30, 2009, June 30,
2009 and September 30, 2008
    
    
    375
    
    
    
    375
    
    
    
    375Additional paid-in capital
    
    
    133,421
    
    
    
    133,416
    
    
    
    133,387Deficit
    
    
    (131,737
    )
    
    
    (130,794
    )
    
    
    (121,091
    )Accumulated other comprehensive loss
    
    
    (929
    )
    
    
    (929
    )
    
    
    (601
    )Less: Treasury stock at cost 
62,270 shares at September 30 2009, June
30, 2009 and September 30, 2008
    
    
    (1,480
    )
    
    
    (1,480
    )
    
    
    (1,480
    )Total stockholders equity (deficiency)
    
    
    (350
    )
    
    
    588
    
    
    
    10,590Total liabilities and stockholders equity (deficiency)
    
    $
    28,162
    
    
    $
    17,051
    
    
    $
    38,416
 
 *
    
    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 EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008(Unaudited)
    
    
    (Unaudited)Net revenue
    
    $
    23,710
    
    
    $
    33,898Cost of goods sold
    
    
    17,239
    
    
    
    23,930Gross profit
    
    
    6,471
    
    
    
    9,968Selling, general and administrative expenses
    
    
    7,251
    
    
    
    9,579Income (loss) from operations
    
    
    (780
    )
    
    
    389Interest expense, net
    
    
    153
    
    
    
    233Income (loss) before income tax provision
    
    
    (933
    )
    
    
    156Income tax provision
    
    
    10
    
    
    
    30Net income (loss)
    
    $
    (943
    )
    
    $
    126Basic earnings (loss) per share
    
    $
    (0.03
    )
    
    $
    0.00Diluted earnings (loss) per share
    
    $
    (0.03
    )
    
    $
    0.00Weighted 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 EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008(Unaudited)Operating ActivitiesNet income (loss)
    
    $
    (943
    )
    
    $
    126Adjustments to reconcile net income (loss) to
net cash used in operating activities:Depreciation and amortization
    
    
    192
    
    
    
    295Amortization of deferred income
    
    
    (66
    )
    
    
    Stock compensation expense
    
    
    5
    
    
    
    14Deferred income taxes
    
    
    7
    
    
    
    22Changes in operating assets and liabilities:Accounts receivable
    
    
    (1,281
    )
    
    
    (9,970
    )Accounts receivable  factored
    
    
    (4,608
    )
    
    
    (46
    )Inventories
    
    
    (2,294
    )
    
    
    (672
    )Prepaid expenses and other current assets
    
    
    (267
    )
    
    
    (162
    )Accounts payable
    
    
    2,885
    
    
    
    636Accrued expenses and long term liabilities
    
    
    353
    
    
    
    813Net cash used in operating activities
    
    
    (6,017
    )
    
    
    (8,944
    )Investing ActivitiesPurchases of fixed assets
    
    
    (139
    )
    
    
    (107
    )Cash used in investing activities
    
    
    (139
    )
    
    
    (107
    )Financing ActivitiesNet proceeds from revolving credit borrowings
    
    
    4,870
    
    
    
    9,480Proceeds from supply premium
    
    
    4,000
    
    
    
    Principal payments on term loan
    
    
    
    
    
    
    (425
    )Net cash provided by financing activities
    
    
    8,870
    
    
    
    9,055Increase in cash
    
    
    2,714
    
    
    
    4Cash beginning of period
    
    
    126
    
    
    
    61Cash end of period
    
    $
    2,840
    
    
    $
    65Supplemental Disclosure of Cash Flow Information:Cash paid for:Taxes
    
    $
    13
    
    
    $
    17Interest
    
    $
    139
    
    
    $
    211
    5




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Business:
   Basis of Presentation:
  6




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




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




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Earnings (Loss) Per Share
  For the Three Months EndedSeptember 30,
    
    September 30,Denominator for earnings (loss) per share (in millions):
    
    2009
    
    2008Denominator for basic earnings (loss) per shareweighted-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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September 30,
    
    
    June 30,
    
    
    September 30,2009
    
    
    2009
    
    
    2008(in thousands)(unaudited)
    
    
    (*)
    
    
    (unaudited)Raw materials
    
    $
    257
    
    
    $
    306
    
    
    $
    229Work-in-process
    
    
    28
    
    
    
    71
    
    
    
    20Finished goods
    
    
    5,848
    
    
    
    3,462
    
    
    
    7,905Total
    
    $
    6,133
    
    
    $
    3,839
    
    
    $
    8,154
 
 *
    
    Derived from the audited financial statements at June 30, 2009.      10




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Factoring Agreement
     11




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Pension PlanFor the Three Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008(Unaudited)(In Thousands)Service cost
    
    $
    2
    
    
    $
    4Interest cost
    
    
    28
    
    
    
    28Expected return on plan assets
    
    
    (26
    )
    
    
    (32
    )Amortization of net loss
    
    
    20
    
    
    
    11Net periodic benefit cost
    
    $
    24
    
    
    $
    11
   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 EndedSeptember 30,
    
    September 30,2009
    
    2008Net revenue
    
    
    100.0
    %
    
    
    100.0
    %Gross profit
    
    
    27.3
    %
    
    
    29.4
    %Selling, general and administrative expenses
    
    
    30.6
    %
    
    
    28.3
    %Interest expense
    
    
    0.6
    %
    
    
    0.7
    %Net income (loss)
    
    
    (4.0
    %)
    
    
    0.4
    %
   14




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Financial Position, Liquidity and Capital Resources
 General
    15




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Financing Agreement
         Factoring Agreement
  16




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Future Financing Requirements
  Critical Accounting Policies and Estimates
    17




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18




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4. Controls and Procedures
    19




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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.
  
 Item 6. Exhibits (filed herewith)
 10.1
    
    Amendment No. 1, dated November 5, 2009 to Amended and Restated Factoring and Financing
Agreement by and among Bernard Chaus Inc., Cynthia Steffe Acquisition, LLC, S.L. Danielle
Acquisition, LLC and The CIT Group/Commercial Services, Inc., dated as of September 10, 2009.31.1
    
    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 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 Barton Heminover, Chief
Financial Officer of Bernard Chaus, Inc.
 20




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SIGNATURES
  BERNARD CHAUS, INC.Date: November 9, 2009
    By:
    /s/ Josephine ChausJOSEPHINE CHAUSChairwoman of the Board, and
Chief Executive OfficerDate: November 9, 2009
    By:
    /s/ David StiffmanDAVID STIFFMANChief Operating OfficerDate: November 9, 2009
    By:
    /s/ Barton HeminoverBARTON HEMINOVERChief Financial Officer 21




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Exhibit Number
    
    Exhibit Title10.1
    
    Amendment No. 1 dated November 5, 2009 to Amended and Restated
Factoring and Financing Agreement by and among Bernard Chaus
Inc., Cynthia Steffe Acquisition, LLC, S.L. Danielle
Acquisition, LLC and The CIT Group/Commercial Services, Inc.,
dated as of September 10, 2009.31.1
    
    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 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 Barton Heminover, Chief Financial Officer of Bernard
Chaus, Inc.
 22