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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, 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 OutstandingOctober 30, 2008
    
    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, 2008, June 30, 2008 and
September 30, 2007
    
    
    3Consolidated Statements of Operations for the
Three Months ended September 30, 2008 and 2007
    
    
    4Consolidated Statements of Cash Flows for the
Three Months ended September 30, 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
    
    
    17PART II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    18Item 1A. Risk Factors
    
    
    18Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3. Defaults Upon Senior Securities
    
    
    18Item 4. Submission of Matters to a Vote of Security Holders
    
    
    18Item 5. Other Information
    
    
    18Item 6. Exhibits
    
    
    19SIGNATURES
    
    
    19CERTIFICATIONS
    
    
    20EX-10.132: LEASE MODIFICATION 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
  September 30,
    
    
    June 30,
    
    
    September 30,2008
    
    
    2008
    
    
    2007(Unaudited)
    
    
    ( * )
    
    
    (Unaudited)AssetsCurrent AssetsCash
    
    $
    65
    
    
    $
    61
    
    
    $
    112Accounts receivable  net
    
    
    23,320
    
    
    
    13,350
    
    
    
    25,397Accounts receivable  due from factor
    
    
    885
    
    
    
    839
    
    
    
    1,766Inventories  net
    
    
    8,154
    
    
    
    7,482
    
    
    
    8,867Prepaid expenses and other current assets
    
    
    758
    
    
    
    596
    
    
    
    731Total current assets
    
    
    33,182
    
    
    
    22,328
    
    
    
    36,873Fixed assets  net
    
    
    1,865
    
    
    
    2,053
    
    
    
    2,654Other assets
    
    
    112
    
    
    
    112
    
    
    
    117Trademarks
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Goodwill
    
    
    2,257
    
    
    
    2,257
    
    
    
    2,257Total assets
    
    $
    38,416
    
    
    $
    27,750
    
    
    $
    42,901Liabilities and Stockholders EquityCurrent LiabilitiesRevolving credit borrowings
    
    $
    16,078
    
    
    $
    4,798
    
    
    $
    9,458Accounts payable
    
    
    7,480
    
    
    
    6,844
    
    
    
    8,040Accrued expenses
    
    
    3,426
    
    
    
    2,585
    
    
    
    3,289Term loan  current
    
    
    
    
    
    
    2,225
    
    
    
    1,700Total current liabilities
    
    
    26,984
    
    
    
    16,452
    
    
    
    22,487Term loan
    
    
    
    
    
    
    
    
    
    
    1,800Long term liabilities
    
    
    358
    
    
    
    386
    
    
    
    315Deferred income taxes
    
    
    484
    
    
    
    462
    
    
    
    396Total liabilities
    
    
    27,826
    
    
    
    17,300
    
    
    
    24,998Stockholders 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 September 30, 2008 and June 30,
2008 and 37,443,643 at September 30, 2007
    
    
    375
    
    
    
    375
    
    
    
    374Additional paid-in capital
    
    
    133,387
    
    
    
    133,373
    
    
    
    133,336Deficit
    
    
    (121,091
    )
    
    
    (121,217
    )
    
    
    (113,893
    )Accumulated other comprehensive loss
    
    
    (601
    )
    
    
    (601
    )
    
    
    (434
    )Less: Treasury stock at cost  62,270 shares
at September 30 2008, June 30, 2008 and
September 30, 2007
    
    
    (1,480
    )
    
    
    (1,480
    )
    
    
    (1,480
    )Total stockholders equity
    
    
    10,590
    
    
    
    10,450
    
    
    
    17,903Total liabilities and stockholders equity
    
    $
    38,416
    
    
    $
    27,750
    
    
    $
    42,901
 
 *
    
    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 EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007(Unaudited)
    
    
    (Unaudited)Net revenue
    
    $
    33,898
    
    
    $
    35,546Cost of goods sold
    
    
    23,930
    
    
    
    25,151Gross profit
    
    
    9,968
    
    
    
    10,395Selling, general and administrative expenses
    
    
    9,579
    
    
    
    10,430Income (loss)from operations
    
    
    389
    
    
    
    (35
    )Interest expense, net
    
    
    233
    
    
    
    269Income (loss) before income tax provision
    
    
    156
    
    
    
    (304
    )Income tax provision
    
    
    30
    
    
    
    50Net Income (loss)
    
    $
    126
    
    
    $
    (354
    )Basic earnings (loss) per share
    
    $
    0.00
    
    
    $
    (0.01
    )Diluted earnings (loss) per share
    
    $
    0.00
    
    
    $
    (0.01
    )Weighted average number of common shares outstanding- basic
    
    
    37,481,000
    
    
    
    37,381,000Weighted average number of common and common equivalent
shares outstanding- diluted
    
    
    37,481,000
    
    
    
    37,381,000
  4




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BERNARD CHAUS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Three Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007(Unaudited)Operating ActivitiesNet income (loss)
    
    $
    126
    
    
    $
    (354
    )Adjustments to reconcile net income (loss) to
net cash used in operating activities:Depreciation and amortization
    
    
    295
    
    
    
    331Stock compensation expense
    
    
    14
    
    
    
    5Deferred income taxes
    
    
    22
    
    
    
    23Changes in operating assets and liabilities:Accounts receivable
    
    
    (9,970
    )
    
    
    (8,792
    )Accounts receivable due from factor
    
    
    (46
    )
    
    
    (128
    )Inventories
    
    
    (672
    )
    
    
    9Prepaid expenses and other current assets
    
    
    (162
    )
    
    
    (80
    )Accounts payable
    
    
    636
    
    
    
    (1,972
    )Accrued expenses and long term liabilities
    
    
    813
    
    
    
    (1,325
    )Net Cash Used In Operating Activities
    
    
    (8,944
    )
    
    
    (12,283
    )Investing ActivitiesPurchases of fixed assets
    
    
    (107
    )
    
    
    (15
    )Cash Used In Investing Activities
    
    
    (107
    )
    
    
    (15
    )Financing ActivitiesNet proceeds from revolving credit borrowings
    
    
    9,480
    
    
    
    9,458Principal payments on term loan
    
    
    (425
    )
    
    
    (425
    )Net Cash Provided By Financing Activities
    
    
    9,055
    
    
    
    9,033Increase (decrease) in cash and cash equivalents
    
    
    4
    
    
    
    (3,265
    )Cash and cash equivalents, beginning of period
    
    
    61
    
    
    
    3,377Cash and cash equivalents, end of period
    
    $
    65
    
    
    $
    112Supplemental Disclosure of Cash Flow Information:Cash paid for:Taxes
    
    $
    17
    
    
    $
    35Interest
    
    $
    211
    
    
    $
    257
    5




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




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Revenue Recognition:
  Credit Terms:
  Accounts Receivable:
   Inventories:
  7




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Cash and Cash Equivalents:
  Income Taxes:
   Earnings (loss) Per Share
  For the Three Months EndedSeptember 30,
    
    
    September 30,Denominator for earnings (loss) per share (in millions):
    
    2008
    
    
    2007Denominator for basic earnings (loss) per share
weighted-average shares outstanding
    
    
    37.5
    
    
    
    37.4Assumed exercise of potential common shares
    
    
    
    
    
    
    Denominator for diluted earnings (loss) per share
    
    
    37.5
    
    
    
    37.4
  New accounting pronouncements:
  8




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9




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September 30,
    
    
    June 30,
    
    
    September 30,2008
    
    
    2008
    
    
    2007(in thousands)(unaudited)
    
    
    
    
    
    (unaudited)Raw materials
    
    $
    229
    
    
    $
    172
    
    
    $
    376Work-in-process
    
    
    20
    
    
    
    29
    
    
    
    101Finished goods
    
    
    7,905
    
    
    
    7,281
    
    
    
    8,390Total
    
    $
    8,154
    
    
    $
    7,482
    
    
    $
    8,867
    1 2
    10




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1 2
   Factoring Agreement
     Pension PlanFor the Three Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007(Unaudited)(In Thousands)Service cost
    
    $
    4
    
    
    $
    6Interest cost
    
    
    28
    
    
    
    27Expected return on plan assets
    
    
    (32
    )
    
    
    (33
    )Amortization of net loss
    
    
    11
    
    
    
    6Net periodic benefit cost
    
    $
    11
    
    
    $
    6
     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 Quarter EndedSeptember 30,
    
    September 30,2008
    
    2007Net revenue
    
    
    100.00
    %
    
    
    100.00
    %Gross profit
    
    
    29.4
    %
    
    
    29.2
    %Selling, general and administrative expenses
    
    
    28.3
    %
    
    
    29.3
    %Interest expense
    
    
    0.7
    %
    
    
    0.8
    %Net income (loss)
    
    
    0.4
    %
    
    
    (1.0
    )%
       13




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Financial Position, Liquidity and Capital Resources
 General
    Financing Agreement
  1 2
  14




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1 2
   Factoring Agreement
   Future Financing Requirements
   15




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Critical Accounting Policies and Estimates
       16




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4. Controls and Procedures
   17




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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.
  18




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Item 6. Exhibits
 *10.132
    
    Lease modification agreement between the Company and G&S Realty 1, LLC dated October 7, 2008 with respect to the Companys executive offices and showrooms at 530 Seventh Avenue, New York, New York.*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: October 31, 2008
    
    By:
    
    /s/ Josephine ChausJOSEPHINE CHAUSChairwoman of the Board, andChief Executive OfficerDate: October 31, 2008
    
    By:
    
    /s/ David StiffmanDAVID STIFFMANChief Operating OfficerDate: October 31, 2008
    
    By:
    
    /s/ Barton HeminoverBARTON HEMINOVERChief Financial Officer
 19




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INDEX TO EXHIBITS
 Exhibit Number
    
    Exhibit Title10.132
    
    Lease modification agreement between the Company and G&S Realty 1, LLC dated October 7, 2008 with respect to the Companys executive offices and showrooms at 530 Seventh Avenue, New York, New York.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