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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 April 2, 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
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See definition of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (check one):
 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 OutstandingMay 17, 2011
    
    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 April 2, 2011,
July 3, 2010 and March 31, 2010
    
    
    3Consolidated Statements of Operations for the
Three and Nine Months Ended April 2, 2011 and March 31, 2010
    
    
    4Consolidated Statements of Cash Flows for the
Nine Months Ended April 2, 2011 and March 31, 2010
    
    
    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-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
  April 2,
    
    
    July 3,
    
    
    March 31,2011
    
    
    2010
    
    
    2010(Unaudited)
    
    
    ( * )
    
    
    (Unaudited)AssetsCurrent AssetsCash
    
    $
    3
    
    
    $
    4
    
    
    $
    51Accounts receivable  factored
    
    
    14,467
    
    
    
    19,404
    
    
    
    19,136Accounts receivable  net
    
    
    1,648
    
    
    
    1,789
    
    
    
    1,854Inventories  net
    
    
    5,235
    
    
    
    8,846
    
    
    
    6,825Prepaid expenses and other current assets
    
    
    1,356
    
    
    
    536
    
    
    
    490Total current assets
    
    
    22,709
    
    
    
    30,579
    
    
    
    28,356Fixed assets  net
    
    
    936
    
    
    
    885
    
    
    
    809Other assets
    
    
    3
    
    
    
    25
    
    
    
    71Trademarks
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Total assets
    
    $
    24,648
    
    
    $
    32,489
    
    
    $
    30,236Liabilities and Stockholders DeficiencyCurrent LiabilitiesRevolving credit borrowings
    
    $
    9,966
    
    
    $
    11,175
    
    
    $
    9,180Accounts payable
    
    
    19,067
    
    
    
    19,399
    
    
    
    16,116Accrued expenses
    
    
    1,158
    
    
    
    2,305
    
    
    
    2,611Total current liabilities
    
    
    30,191
    
    
    
    32,879
    
    
    
    27,907Deferred income
    
    
    2,934
    
    
    
    3,234
    
    
    
    3,333Long term liabilities
    
    
    1,851
    
    
    
    1,735
    
    
    
    1,617Deferred income taxes
    
    
    193
    
    
    
    173
    
    
    
    168Total liabilities
    
    
    35,169
    
    
    
    38,021
    
    
    
    33,025Stockholders 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 April 2, 2011,
July 3, 2010 and March 31, 2010
    
    
    375
    
    
    
    375
    
    
    
    375Additional paid-in capital
    
    
    133,440
    
    
    
    133,440
    
    
    
    133,437Deficit
    
    
    (141,516
    )
    
    
    (136,827
    )
    
    
    (134,192
    )Accumulated other comprehensive loss
    
    
    (1,040
    )
    
    
    (1,040
    )
    
    
    (929
    )Less: Treasury stock at cost 
3,062,270 shares at April 2, 2011, 62,270 at July
3, 2010 and March 31, 2010
    
    
    (1,780
    )
    
    
    (1,480
    )
    
    
    (1,480
    )Total stockholders deficiency
    
    
    (10,521
    )
    
    
    (5,532
    )
    
    
    (2,789
    )Total liabilities and stockholders deficiency
    
    $
    24,648
    
    
    $
    32,489
    
    
    $
    30,236
 
 *
    
    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 Ended
    
    
    For the Nine Months EndedApril 2,
    
    
    March 31,
    
    
    April 2,
    
    
    March 31,2011
    
    
    2010
    
    
    2011
    
    
    2010(Unaudited)
    
    
    (Unaudited)Net revenue
    
    $
    23,260
    
    
    $
    27,781
    
    
    $
    67,885
    
    
    $
    72,588Cost of goods sold
    
    
    18,812
    
    
    
    19,722
    
    
    
    54,790
    
    
    
    53,357Gross profit
    
    
    4,448
    
    
    
    8,059
    
    
    
    13,095
    
    
    
    19,231Selling, general and administrative expenses
    
    
    6,956
    
    
    
    7,817
    
    
    
    21,262
    
    
    
    22,023Accrued gain on early termination of license agreement
    
    
    (1,165
    )
    
    
    
    
    
    
    (4,055
    )
    
    
    Income (loss) from operations
    
    
    (1,343
    )
    
    
    242
    
    
    
    (4,112
    )
    
    
    (2,792
    )Interest expense
    
    
    163
    
    
    
    216
    
    
    
    541
    
    
    
    576Income (loss) before income tax provision
    
    
    (1,506
    )
    
    
    26
    
    
    
    (4,653
    )
    
    
    (3,368
    )Income tax provision
    
    
    12
    
    
    
    10
    
    
    
    36
    
    
    
    30Net income (loss)
    
    $
    (1,518
    )
    
    $
    16
    
    
    $
    (4,689
    )
    
    $
    (3,398
    )Basic earnings (loss) per share
    
    $
    (0.04
    )
    
    $
    0.00
    
    
    $
    (0.13
    )
    
    $
    (0.09
    )Diluted earnings (loss) per share
    
    $
    (0.04
    )
    
    $
    0.00
    
    
    $
    (0.13
    )
    
    $
    (0.09
    )Weighted
average number of shares outstanding  basic
    
    
    34,514,000
    
    
    
    37,481,000
    
    
    
    36,492,000
    
    
    
    37,481,000Weighted average number of common and common equivalent
shares outstanding  diluted
    
    
    34,514,000
    
    
    
    37,481,000
    
    
    
    36,492,000
    
    
    
    37,481,000
  4




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BERNARD CHAUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Nine Months EndedApril 2,
    
    
    March 31,2011
    
    
    2010(Unaudited)
    
    
    (Unaudited)Operating ActivitiesNet loss
    
    $
    (4,689
    )
    
    $
    (3,398
    )Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    275
    
    
    
    521Loss on disposal of fixed assets
    
    
    
    
    
    
    43Amortization of deferred income
    
    
    (300
    )
    
    
    (267
    )Stock compensation expense
    
    
    
    
    
    
    21Deferred rent expense
    
    
    78
    
    
    
    248Deferred income taxes
    
    
    20
    
    
    
    21Changes in operating assets and liabilities:Accounts receivable  factored
    
    
    4,937
    
    
    
    (8,547
    )Accounts receivable
    
    
    141
    
    
    
    (1,647
    )Inventories
    
    
    3,611
    
    
    
    (2,986
    )Prepaid expenses and other assets
    
    
    (820
    )
    
    
    (180
    )Accounts payable
    
    
    (332
    )
    
    
    9,865Accrued expenses and long term liabilities
    
    
    (1,109
    )
    
    
    121Net cash provided by (used in) operating activities
    
    
    1,812
    
    
    
    (6,185
    )Investing ActivitiesPurchases of fixed assets
    
    
    (304
    )
    
    
    (464
    )Cash used in investing activities
    
    
    (304
    )
    
    
    (464
    )Financing ActivitiesNet proceeds from (repayments of) revolving
credit borrowings
    
    
    (1,209
    )
    
    
    2,574Purchase of treasury stock
    
    
    (600
    )
    
    
    Proceeds from reissuance of treasury stock
    
    
    300
    
    
    
    Proceeds from supply agreement
    
    
    
    
    
    
    4,000Net cash provided by (used in) financing activities
    
    
    (1,509
    )
    
    
    6,574Decrease in cash
    
    
    (1
    )
    
    
    (75
    )Cash, beginning of year
    
    
    4
    
    
    
    126Cash, end of period
    
    $
    3
    
    
    $
    51Supplemental Disclosure of Cash Flow Information:Cash paid for:Taxes
    
    $
    13
    
    
    $
    14Interest
    
    $
    499
    
    
    $
    528
 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:
  7




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Factoring Agreement and Accounts Receivable:
  Inventories:
  Long-Lived Assets and Trademarks:
  Income Taxes:
  8




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Earnings (loss) Per Share
  For the Three Months Ended
    
    
    For the Nine Months EndedApril 2,
    
    
    March 31,
    
    
    April 2,
    
    
    March 31,2011
    
    
    2010
    
    
    2011
    
    
    2010Denominator for earnings (loss) per share (in
millions):Denominator for basic earnings (loss) per share:weighted-average shares outstanding
    
    
    34.5
    
    
    
    37.5
    
    
    
    36.5
    
    
    
    37.5Assumed exercise of potential common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted earnings (loss) per share
    
    
    34.5
    
    
    
    37.5
    
    
    
    36.5
    
    
    
    37.5
 Fair Value of Financial Instruments:
  New Accounting Pronouncements:
   9




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April 2,
    
    
    July 3,
    
    
    March 31,2011
    
    
    2010
    
    
    2010(in thousands)(unaudited)
    
    
    (*)
    
    
    (unaudited)Raw materials
    
    $
    288
    
    
    $
    457
    
    
    $
    543Work-in-process
    
    
    104
    
    
    
    63
    
    
    
    213Finished goods
    
    
    4,843
    
    
    
    8,326
    
    
    
    6,069Total
    
    $
    5,235
    
    
    $
    8,846
    
    
    $
    6,825
 
 *
    
    Derived from the audited financial statements at July 3, 2010.       10




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Factoring Agreement
      For the Three Months Ended
    
    
    For the Nine Months EndedApril 2,
    
    
    March 31,
    
    
    April 2,
    
    
    March 31,2011
    
    
    2010
    
    
    2011
    
    
    2010(Unaudited)
    
    
    (Unaudited)(In Thousands)
    
    
    (In Thousands)Service cost
    
    $
    2
    
    
    $
    2
    
    
    $
    6
    
    
    $
    6Interest cost
    
    
    28
    
    
    
    28
    
    
    
    84
    
    
    
    84Expected return on plan assets
    
    
    (26
    )
    
    
    (26
    )
    
    
    (78
    )
    
    
    (78
    )Amortization of net loss
    
    
    9
    
    
    
    20
    
    
    
    27
    
    
    
    60Net periodic benefit cost
    
    $
    13
    
    
    $
    24
    
    
    $
    39
    
    
    $
    72
     11




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Fiscal year ending:
    
    Amount(in thousands)2011
    
    $
    02012
    
    
    2,1402013
    
    
    1,3502014
    
    
    1,6352015
    
    
    1,8602016
    
    
    975Total
    
    $
    7,960
  In connection with the KCP Termination Agreement, in January 2011, the Company repurchased 6
million shares of common stock owned by KCP for $0.6 million utilizing a short term extension of
credit by CIT.In February 2011, the Company sold 3 million of the repurchased shares to Camuto, a
licensor to the Company, for $0.3 million. The proceeds of the sale were used to repay a portion
of the short term extension of credit by CIT (see Note 8 below).
   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 Nine Months EndedApril 2,
    
    
    March 31,
    
    
    April 2,
    
    
    March 31,2011
    
    
    2010
    
    
    2011
    
    
    2010Net Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross Profit
    
    
    19.1
    %
    
    
    29.0
    %
    
    
    19.3
    %
    
    
    26.5
    %Selling, general and administrative expenses
    
    
    29.9
    %
    
    
    28.1
    %
    
    
    31.3
    %
    
    
    30.3
    %Accrued gain on early termination of license agreement
    
    
    (5.0)
    %
    
    
    
    %
    
    
    (6.0)
    %
    
    
    
    %Interest expense
    
    
    0.7
    %
    
    
    0.8
    %
    
    
    0.8
    %
    
    
    0.8
    %Net income (loss)
    
    
    (6.5
    )%
    
    
    0.1
    %
    
    
    (6.9
    )%
    
    
    (4.7
    )%
    14




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Financial Position, Liquidity and Capital Resources
 General
     Financing Agreement
   16




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Factoring Agreement
  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)
 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.
 20




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SIGNATURES
  BERNARD CHAUS, INC.Date:    May 17, 2011
    By:
    /s/ Josephine ChausJOSEPHINE CHAUSChairwoman of the Board, and Chief Executive Officer Date: May 17, 2011
    By:
    /s/ William P.RungeWilliam P. RungeInterim Chief Financial Officer 21




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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 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.
 22