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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 October 1, 2011.
 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 OutstandingNovember 15, 2011
    
    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 October 1, 2011,
July 2, 2011 and October 2, 2010
    
    
    3Consolidated Statements of Operations for the
Three Months Ended October 1, 2011 and October 2, 2010
    
    
    4Consolidated Statements of Cash Flows for the
Three Months Ended October 1, 2011 and October 2, 2010
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    12Item 4. Controls and Procedures
    
    
    17PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    17Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3. Defaults Upon Senior Securities
    
    
    18Item 4. [Removed and Reserved]
    
    
    18Item 5. Other Information
    
    
    18Item 6. Exhibits
    
    
    18SIGNATURES
    
    
    19EX-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 1,
    
    
    July 2,
    
    
    October 2,2011
    
    
    2011
    
    
    2010(Unaudited)
    
    
    ( * )
    
    
    (Unaudited)AssetsCurrent AssetsCash
    
    $
    2
    
    
    $
    3
    
    
    $
    3Accounts receivable  factored
    
    
    13,729
    
    
    
    6,466
    
    
    
    18,793Accounts receivable  net
    
    
    1,466
    
    
    
    1,004
    
    
    
    2,568Inventories  net
    
    
    6,470
    
    
    
    5,077
    
    
    
    8,785Prepaid expenses and other current assets
    
    
    429
    
    
    
    1,476
    
    
    
    498Total current assets
    
    
    22,096
    
    
    
    14,026
    
    
    
    30,647Fixed assets  net
    
    
    1,407
    
    
    
    1,159
    
    
    
    920Other assets
    
    
    
    
    
    
    
    
    
    
    7Trademarks
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Total assets
    
    $
    24,503
    
    
    $
    16,185
    
    
    $
    32,574Liabilities and Stockholders DeficiencyCurrent LiabilitiesRevolving credit borrowings
    
    $
    5,640
    
    
    $
    2,577
    
    
    $
    9,990Accounts payable
    
    
    25,449
    
    
    
    20,605
    
    
    
    20,732Accrued expenses
    
    
    2,444
    
    
    
    1,473
    
    
    
    1,353Total current liabilities
    
    
    33,533
    
    
    
    24,655
    
    
    
    32,075Deferred income
    
    
    2,734
    
    
    
    2,834
    
    
    
    3,135Long term liabilities
    
    
    1,957
    
    
    
    1,927
    
    
    
    1,773Deferred income taxes
    
    
    207
    
    
    
    200
    
    
    
    180Total liabilities
    
    
    38,431
    
    
    
    29,616
    
    
    
    37,163Commitments and ContingenciesStockholders 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 1,
2011, July 2, 2011 and
October 2, 2010
    
    
    375
    
    
    
    375
    
    
    
    375Additional paid-in capital
    
    
    133,443
    
    
    
    133,443
    
    
    
    133,441Deficit
    
    
    (145,181
    )
    
    
    (144,684
    )
    
    
    (135,885
    )Accumulated other comprehensive loss
    
    
    (1,085
    )
    
    
    (1,085
    )
    
    
    (1,040
    )Less: Treasury stock at cost 
62,270 shares at October 1, 2011, at July 2, 2011
and October 2, 2010
    
    
    (1,480
    )
    
    
    (1,480
    )
    
    
    (1,480
    )Total stockholders deficiency
    
    
    (13,928
    )
    
    
    (13,431
    )
    
    
    (4,589
    )Total liabilities and stockholders deficiency
    
    $
    24,503
    
    
    $
    16,185
    
    
    $
    32,574
 
 *
    
    Derived from audited financial statements at July 2, 2011.  3




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BERNARD CHAUS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three Months EndedOctober 1, 2011
    
    
    October 2, 2010(Unaudited)Net revenue
    
    $
    22,347
    
    
    $
    27,716Cost of goods sold
    
    
    16,259
    
    
    
    21,123Gross profit
    
    
    6,088
    
    
    
    6,593Selling, general and administrative expenses
    
    
    6,462
    
    
    
    7,295Accrued gain on early termination of license agreement
    
    
    
    
    
    
    (1,857
    )Income (loss) from operations
    
    
    (374
    )
    
    
    1,155Interest expense
    
    
    114
    
    
    
    201Income (loss) before income tax provision
    
    
    (488
    )
    
    
    954Income tax provision
    
    
    9
    
    
    
    12Net income (loss)
    
    $
    (497
    )
    
    $
    942Basic earnings (loss) per share
    
    $
    (0.01
    )
    
    $
    0.03Diluted earnings (loss) per share
    
    $
    (0.01
    )
    
    $
    0.03Weighted average number of shares outstanding- basic
    
    
    37,481
    
    
    
    37,481Weighted average number of common and common
equivalent shares outstanding- diluted
    
    
    37,481
    
    
    
    37,481
  4




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BERNARD CHAUS, INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Three Months EndedOctober 1,
    
    

October 2,2011
    
    

    2010(Unaudited)Operating ActivitiesNet income (loss)
    
    $
    (497
    )
    
    $
    942Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    79
    
    
    
    89Amortization of deferred income
    
    
    (100
    )
    
    
    (99
    )Stock compensation expense
    
    
    
    
    
    
    1Deferred rent expense
    
    
    15
    
    
    
    26Deferred income taxes
    
    
    7
    
    
    
    7Changes in operating assets and liabilities:Accounts receivable  factored
    
    
    (7,263
    )
    
    
    611Accounts receivable
    
    
    (462
    )
    
    
    (779
    )Inventories
    
    
    (1,393
    )
    
    
    61Prepaid expenses and other assets
    
    
    1,047
    
    
    
    38Accounts payable
    
    
    4,844
    
    
    
    1,333Accrued expenses and long term liabilities
    
    
    986
    
    
    
    (940
    )Net cash provided by (used in) operating activities
    
    
    (2,737
    )
    
    
    1,290Investing ActivitiesPurchases of fixed assets
    
    
    (327
    )
    
    
    (106
    )Cash used in investing activities
    
    
    (327
    )
    
    
    (106
    )Financing ActivitiesNet proceeds from (repayments of) revolving credit borrowings
    
    
    3,063
    
    
    
    (1,185
    )Net cash provided by (used in) financing activities
    
    
    3,063
    
    
    
    (1,185
    )Decrease in cash
    
    
    (1
    )
    
    
    (1
    )Cash, beginning of year
    
    
    3
    
    
    
    4Cash, end of period
    
    $
    2
    
    
    $
    3Supplemental Disclosure of Cash Flow Information:Cash paid for:Taxes
    
    $
    2
    
    
    $
    14Interest
    
    $
    84
    
    
    $
    182
  5




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Business:
 ® ® ® ® ® ® ® ®
  Recent Developments:
    6




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Liquidity:
  Basis of Presentation:
  Fiscal Year:
  Principles of Consolidation:
  7




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Use of Estimates:
  Revenue Recognition:
   Factoring Agreement and Accounts Receivable:
  Inventories:
  8




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Long-Lived Assets and Trademarks:
  Income Taxes:
   Earnings (Loss) Per Share
  For the Three Months EndedOctober 1,
    
    
    October 2,2011
    
    
    2010Denominator 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
 9




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Fair Value of Financial Instruments:
  New Accounting Pronouncements:
   October 1,
    
    
    July 2,
    
    
    October 2,2011
    
    
    2011
    
    
    2010(in thousands)(unaudited)
    
    
    (*)
    
    
    (unaudited)Raw materials
    
    $
    32
    
    
    $
    184
    
    
    $
    399Work-in-process
    
    
    
    
    
    
    7
    
    
    
    46Finished goods
    
    
    6,438
    
    
    
    4,886
    
    
    
    8,340Total
    
    $
    6,470
    
    
    $
    5,077
    
    
    $
    8,785
 
 *
    
    Derived from the audited financial statements as of July 2, 2011.     10




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Factoring Agreement
      For the Three Months EndedOctober 1,
    
    
    October 2,2011
    
    
    2010(Unaudited)(In Thousands)Service cost
    
    $
    3
    
    
    $
    2Interest cost
    
    
    31
    
    
    
    28Expected return on plan assets
    
    
    (28
    )
    
    
    (26
    )Amortization of net loss
    
    
    10
    
    
    
    9Net periodic benefit cost
    
    $
    16
    
    
    $
    13
   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 EndedOctober 1,
    
    
    October 2,2011
    
    
    2010Net Revenue
    
    
    100.0
    %
    
    
    100.0
    %Gross Profit
    
    
    27.2
    %
    
    
    23.8
    %Selling, general and administrative expenses
    
    
    28.9
    %
    
    
    26.3
    %Accrued gain on early termination of
license agreement
    
    
    
    %
    
    
    (6.7
    )%Interest expense
    
    
    0.5
    %
    
    
    0.7
    %Net income (loss)
    
    
    (2.2
    )%
    
    
    3.4
    %
 
   13




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Financial Position, Liquidity and Capital Resources
 General
 
   Financing Agreement
  14




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Factoring Agreement
  Off-balance Sheet Arrangements
  Future Financing Requirements
   15




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Critical Accounting Policies and Estimates
      16




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Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
   17




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 5. Other Information.
 .
 
 Item 6. Exhibits (filed herewith)
 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 Interim 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 William P. Runge, Interim Chief Financial Officer of
Bernard Chaus, Inc.
 18




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SIGNATURES
  BERNARD CHAUS, INC.Date:    November 15, 2011
    By:
    /s/ Josephine ChausJosephine ChausChairwoman of the Board, and
Chief Executive OfficerDate: November 15, 2011
    By:
    /s/ William P. RungeWilliam P. RungeInterim Chief Financial Officer 19