##### 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, 2008.
 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)Seventh Avenue, New York, New York
    
    10018(Address of Principal Executive Offices)
    
    (Zip Code)
 (212) 354-1280
 
  þ 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
      OutstandingFebruary 17, 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
December 31, 2008, June 30, 2008 and December 31, 2007


3Consolidated Statements of Operations for the
Three and Six Months ended December 31, 2008 and 2007


4Consolidated Statements of Cash Flows for the
Six Months ended December 31, 2008 and 2007


5Notes to Consolidated Financial Statements


6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations


12Item 3. Quantitative and Qualitative Disclosures About Market Risk


17Item 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


20CERTIFICATIONS


22EX-10.133: AMENDMENT NO.1 TO THE AMENDED AND RESTATED FINANCING AGREEMENTEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 BERNARD CHAUS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  December 31,
    
    
    June 30,
    
    
    December 31,2008
    
    
    2008
    
    
    2007(Unaudited)
    
    
    ( * )
    
    
    (Unaudited)AssetsCurrent AssetsCash
    
    $
    82
    
    
    $
    61
    
    
    $
    73Accounts receivable  net
    
    
    144
    
    
    
    13,350
    
    
    
    13,805Due from factor
    
    
    16,478
    
    
    
    839
    
    
    
    Inventories  net
    
    
    11,249
    
    
    
    7,482
    
    
    
    8,071Prepaid expenses and other current assets
    
    
    733
    
    
    
    596
    
    
    
    736Total current assets
    
    
    28,686
    
    
    
    22,328
    
    
    
    22,685Fixed assets  net
    
    
    1,650
    
    
    
    2,053
    
    
    
    2,440Other assets
    
    
    190
    
    
    
    112
    
    
    
    123Trademarks
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Goodwill
    
    
    2,257
    
    
    
    2,257
    
    
    
    2,257Total assets
    
    $
    33,783
    
    
    $
    27,750
    
    
    $
    28,505Liabilities and Stockholders EquityCurrent LiabilitiesRevolving credit borrowings
    
    $
    14,984
    
    
    $
    4,798
    
    
    $
    1,781Accounts payable
    
    
    8,016
    
    
    
    6,844
    
    
    
    6,785Accrued expenses
    
    
    2,658
    
    
    
    2,585
    
    
    
    2,639Term loan  current
    
    
    
    
    
    
    2,225
    
    
    
    3,075Total current liabilities
    
    
    25,658
    
    
    
    16,452
    
    
    
    14,280Long term liabilities
    
    
    602
    
    
    
    386
    
    
    
    284Deferred income taxes
    
    
    506
    
    
    
    462
    
    
    
    419Total liabilities
    
    
    26,766
    
    
    
    17,300
    
    
    
    14,983Stockholders EquityPreferred 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, 2008 and June 30, 2008 and
37,443,643 at December 31, 2007
    
    
    375
    
    
    
    375
    
    
    
    374Additional paid-in capital
    
    
    133,395
    
    
    
    133,373
    
    
    
    133,344Deficit
    
    
    (124,672
    )
    
    
    (121,217
    )
    
    
    (118,282
    )Accumulated other comprehensive loss
    
    
    (601
    )
    
    
    (601
    )
    
    
    (434
    )Less: Treasury stock at cost 
62,270 shares at December 31, 2008, June
30, 2008 and December 31, 2007
    
    
    (1,480
    )
    
    
    (1,480
    )
    
    
    (1,480
    )Total stockholders equity
    
    
    7,017
    
    
    
    10,450
    
    
    
    13,522Total liabilities and stockholders equity
    
    $
    33,783
    
    
    $
    27,750
    
    
    $
    28,505
 
 *
    
    Derived from audited financial statements at June 30, 2008.  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 31,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)Net revenue
    
    $
    26,049
    
    
    $
    25,376
    
    
    $
    59,947
    
    
    $
    60,922Cost of goods sold
    
    
    20,426
    
    
    
    20,096
    
    
    
    44,356
    
    
    
    45,247Gross profit
    
    
    5,623
    
    
    
    5,280
    
    
    
    15,591
    
    
    
    15,675Selling, general and administrative expenses
    
    
    8,882
    
    
    
    9,396
    
    
    
    18,461
    
    
    
    19,826Loss from operations
    
    
    (3,259
    )
    
    
    (4,116
    )
    
    
    (2,870
    )
    
    
    (4,151
    )Interest expense, net
    
    
    289
    
    
    
    258
    
    
    
    522
    
    
    
    527Loss before income tax provision
    
    
    (3,548
    )
    
    
    (4,374
    )
    
    
    (3,392
    )
    
    
    (4,678
    )Income tax provision
    
    
    33
    
    
    
    15
    
    
    
    63
    
    
    
    65Net loss
    
    $
    (3,581
    )
    
    $
    (4,389
    )
    
    $
    (3,455
    )
    
    $
    (4,743
    )Basic loss per share
    
    $
    (0.10
    )
    
    $
    (0.12
    )
    
    $
    (0.09
    )
    
    $
    (0.13
    )Diluted loss per share
    
    $
    (0.10
    )
    
    $
    (0.12
    )
    
    $
    (0.09
    )
    
    $
    (0.13
    )Weighted average number of shares
outstanding- basic
    
    
    37,481,000
    
    
    
    37,381,000
    
    
    
    37,481,000
    
    
    
    37,381,000Weighted average number of common and
common equivalent shares outstanding-
diluted
    
    
    37,481,000
    
    
    
    37,381,000
    
    
    
    37,481,000
    
    
    
    37,381,000
  4




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BERNARD CHAUS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007(Unaudited)Operating ActivitiesNet loss
    
    $
    (3,455
    )
    
    $
    (4,743
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation and amortization
    
    
    614
    
    
    
    623Stock compensation expense
    
    
    22
    
    
    
    13Gain from insurance recovery
    
    
    (384
    )
    
    
    Proceeds from insurance recovery
    
    
    92
    
    
    
    Deferred income taxes
    
    
    44
    
    
    
    46Changes in operating assets and liabilities:Accounts receivable
    
    
    13,206
    
    
    
    2,800Due from factor
    
    
    (15,639
    )
    
    
    1,638Inventories
    
    
    (3,767
    )
    
    
    805Prepaid expenses and other current assets
    
    
    (132
    )
    
    
    (93
    )Accounts payable
    
    
    1,172
    
    
    
    (3,227
    )Accrued expenses and long term liabilities
    
    
    289
    
    
    
    (2,006
    )Net Cash Used In Operating Activities
    
    
    (7,938
    )
    
    
    (4,144
    )Investing ActivitiesPurchases of fixed assets
    
    
    (194
    )
    
    
    (91
    )Proceeds from insurance recovery
    
    
    192
    
    
    
    Net cash Used In Investing Activities
    
    
    (2
    )
    
    
    (91
    )Financing ActivitiesNet proceeds from revolving credit borrowings
    
    
    8,386
    
    
    
    1,781Principal payments on term loan
    
    
    (425
    )
    
    
    (850
    )Net cash Provided By Financing Activities
    
    
    7,961
    
    
    
    931Increase (decrease) in cash and cash equivalents
    
    
    21
    
    
    
    (3,304
    )Cash and cash equivalents, beginning of period
    
    
    61
    
    
    
    3,377Cash and cash equivalents, end of period
    
    $
    82
    
    
    $
    73Supplemental Disclosure of Cash Flow Information:Cash paid for:Taxes
    
    $
    21
    
    
    $
    41Interest
    
    $
    456
    
    
    $
    508
    5




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Business:
 ® ® ® ® ®
 Basis of Presentation:
  Principles of Consolidation:
  Use of Estimates:
  6




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Revenue Recognition:
  Due from Factor and Accounts Receivable:
  Inventories:
  Cash and Cash Equivalents:
  Income Taxes:
  7




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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,Denominator for earnings (loss) per share (in millions):
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Denominator for basic earnings (loss) per share
weighted-average shares outstanding
    
    
    37.5
    
    
    
    37.4
    
    
    
    37.5
    
    
    
    37.4Assumed exercise of potential common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted earnings (loss) per share
    
    
    37.5
    
    
    
    37.4
    
    
    
    37.5
    
    
    
    37.4
  New accounting pronouncements:
   8




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9




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December 31,
    
    
    June 30,
    
    
    December 31,2008
    
    
    2008
    
    
    2007(in thousands)(unaudited)
    
    
    
    
    
    
    (unaudited)Raw materials
    
    $
    339
    
    
    $
    172
    
    
    $
    397Work-in-process
    
    
    75
    
    
    
    29
    
    
    
    34Finished goods
    
    
    10,835
    
    
    
    7,281
    
    
    
    7,640Total
    
    $
    11,249
    
    
    $
    7,482
    
    
    $
    8,071
    1 2
 
   10




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1 2
   Factoring Agreement
     For the Three Months Ended
    
    
    For the Six Months EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)(In Thousands)
    
    
    (In Thousands)Service cost
    
    $
    4
    
    
    $
    6
    
    
    $
    8
    
    
    $
    12Interest cost
    
    
    28
    
    
    
    27
    
    
    
    56
    
    
    
    54Expected return on plan assets
    
    
    (32
    )
    
    
    (33
    )
    
    
    (64
    )
    
    
    (66
    )Amortization of net loss
    
    
    11
    
    
    
    6
    
    
    
    22
    
    
    
    12Net periodic benefit cost
    
    $
    11
    
    
    $
    6
    
    
    $
    22
    
    
    $
    12
   11




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Forward-looking Statements
     Overview
 ® ® ® ® ®
 12




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Results of Operations
  For the Three Months Ended
    
    For the Six Months EndedDecember 31,
    
    December 31,
    
    December 31,
    
    December 31,2008
    
    2007
    
    2008
    
    2007Net Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross Profit
    
    
    21.6
    %
    
    
    20.8
    %
    
    
    26.0
    %
    
    
    25.7
    %Selling, general
and administrative
expenses
    
    
    34.1
    %
    
    
    37.0
    %
    
    
    30.8
    %
    
    
    32.5
    %Interest expense
    
    
    1.1
    %
    
    
    1.0
    %
    
    
    0.9
    %
    
    
    0.9
    %Net loss
    
    
    (13.7
    )%
    
    
    (17.3
    )%
    
    
    (5.8
    )%
    
    
    (7.8
    )%
      13




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Financial Position, Liquidity and Capital Resources
 General
   14




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Financing Agreement
  1 2
  Future Financing Requirements.
 1 2
   15




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Factoring Agreement
 Future Financing Requirements
  Future Financing Requirements
   Critical Accounting Policies and Estimates
   16




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 .
    
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  17




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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.
 (a)
    
    The Annual Meeting of Stockholders of the Company was held on November 13, 2008
at 9:00 a.m.(c)
    
    At such meeting, the Stockholders voted on the election of three directors of the
Company to serve until the next Annual Meeting of Stockholders and until their
respective successors have been elected and qualified.
 Number of SharesFor
    
    WithheldHarvey M. Krueger
    
    
    36,077,172
    
    
    
    700,414Philip G. Barach
    
    
    36,077,082
    
    
    
    700,504Josephine Chaus
    
    
    36,072,067
    
    
    
    705,519
  Number of SharesFor
    
    Withheld29,770,652
    
    
    
    5,934,176
 
 Item 5. Other Information.
  19




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Item 6. Exhibits
 *10.133
    
    Amendment No. 1 to Amended and Restated Financing Agreement and Waiver, dated
February 1, 2009, between the Company and the CIT Group/Commercial Services,
Inc.*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.
 
 SIGNATURES
  BERNARD CHAUS, INC.
(Registrant)Date: February 17, 2009
    By:
    /s/ Josephine ChausJOSEPHINE CHAUSChairwoman of the Board, and

Chief Executive OfficerDate: February 17, 2009
    By:
    /s/ David StiffmanDAVID STIFFMANChief Operating OfficerDate: February 17, 2009
    By:
    /s/ Barton HeminoverBARTON HEMINOVERChief Financial Officer 20




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INDEX TO EXHIBITS
 Exhibit Number
    
    Exhibit Title10.133
    
    Amendment No. 1 to Amended and Restated Financing
Agreement and waiver, dated February 1, 2009, between the
Company and the CIT Group/Commercial Services, Inc.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.
 21