##### 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 March 31, 2010.
 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
  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 07, 2010
    
    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 March 31, 2010,
June 30, 2009 and March 31, 2009
    
    
    3Consolidated Statements of Operations for the
Three and Nine Months Ended March 31, 2010 and 2009
    
    
    4Consolidated Statements of Cash Flows for the
Nine Months Ended March 31, 2010 and 2009
    
    
    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
    
    
    18Item 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. (Removed and Reserved)
    
    
    19Item 5. Other Information
    
    
    19Item 6. Exhibits
    
    
    19SIGNATURES
    
    
    20EX-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
 March 31,
    
    
    June 30,
    
    
    March 31,2010
    
    
    2009
    
    
    2009(Unaudited)
    
    
    ( * )
    
    
    (Unaudited)AssetsCurrent AssetsCash
    
    $
    51
    
    
    $
    126
    
    
    $
    70Accounts receivable  factored
    
    
    19,136
    
    
    
    10,589
    
    
    
    22,122Accounts receivable  net
    
    
    1,854
    
    
    
    207
    
    
    
    82Inventories  net
    
    
    6,825
    
    
    
    3,839
    
    
    
    7,935Prepaid expenses and other current assets
    
    
    490
    
    
    
    275
    
    
    
    753Total current assets
    
    
    28,356
    
    
    
    15,036
    
    
    
    30,962Fixed assets  net
    
    
    809
    
    
    
    857
    
    
    
    1,276Other assets
    
    
    71
    
    
    
    158
    
    
    
    174Trademarks
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Goodwill
    
    
    
    
    
    
    
    
    
    
    2,257Total assets
    
    $
    30,236
    
    
    $
    17,051
    
    
    $
    35,669Liabilities and Stockholders Equity (Deficiency)Current LiabilitiesRevolving credit borrowings
    
    $
    9,180
    
    
    $
    6,606
    
    
    $
    17,103Accounts payable
    
    
    16,116
    
    
    
    6,251
    
    
    
    7,534Accrued expenses
    
    
    2,611
    
    
    
    2,164
    
    
    
    2,893Total current liabilities
    
    
    27,907
    
    
    
    15,021
    
    
    
    27,530Deferred income
    
    
    3,333
    
    
    
    
    
    
    
    Long term liabilities
    
    
    1,617
    
    
    
    1,295
    
    
    
    710Deferred income taxes
    
    
    168
    
    
    
    147
    
    
    
    528Total liabilities
    
    
    33,025
    
    
    
    16,463
    
    
    
    28,768Stockholders 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
March 31, 2010, June 30, 2009
and March 31, 2009
    
    
    375
    
    
    
    375
    
    
    
    375Additional paid-in capital
    
    
    133,437
    
    
    
    133,416
    
    
    
    133,405Deficit
    
    
    (134,192
    )
    
    
    (130,794
    )
    
    
    (124,798
    )Accumulated other comprehensive loss
    
    
    (929
    )
    
    
    (929
    )
    
    
    (601
    )Less: Treasury stock at cost 
62,270 shares at March 31 2010, June
30, 2009 and March 31, 2009
    
    
    (1,480
    )
    
    
    (1,480
    )
    
    
    (1,480
    )Total stockholders equity (deficiency)
    
    
    (2,789
    )
    
    
    588
    
    
    
    6,901Total liabilities and stockholders
equity (deficiency)
    
    $
    30,236
    
    
    $
    17,051
    
    
    $
    35,669
 
 *
    
    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 Ended
    
    
    For the Nine Months EndedMarch 31,
    
    
    March 31,
    
    
    March 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(Unaudited)
    
    
    (Unaudited)Net revenue
    
    $
    27,781
    
    
    $
    33,107
    
    
    $
    72,588
    
    
    $
    93,054Cost of goods sold
    
    
    19,722
    
    
    
    23,729
    
    
    
    53,357
    
    
    
    68,085Gross profit
    
    
    8,059
    
    
    
    9,378
    
    
    
    19,231
    
    
    
    24,969Selling, general and administrative expenses
    
    
    7,817
    
    
    
    9,232
    
    
    
    22,023
    
    
    
    27,726Income (loss) from operations
    
    
    242
    
    
    
    146
    
    
    
    (2,792
    )
    
    
    (2,757
    )Interest expense, net
    
    
    216
    
    
    
    240
    
    
    
    576
    
    
    
    729Income (loss) before income tax provision
    
    
    26
    
    
    
    (94
    )
    
    
    (3,368
    )
    
    
    (3,486
    )Income tax provision
    
    
    10
    
    
    
    32
    
    
    
    30
    
    
    
    95Net income (loss)
    
    $
    16
    
    
    $
    (126
    )
    
    $
    (3,398
    )
    
    $
    (3,581
    )Basic earnings (loss) per share
    
    $
    0.00
    
    
    $
    (0.00
    )
    
    $
    (0.09
    )
    
    $
    (0.10
    )Diluted earnings (loss) per share
    
    $
    0.00
    
    
    $
    (0.00
    )
    
    $
    (0.09
    )
    
    $
    (0.10
    )Weighted average number of shares outstanding-
basic
    
    
    37,481,000
    
    
    
    37,481,000
    
    
    
    37,481,000
    
    
    
    37,481,000Weighted average number of common and common
equivalent shares outstanding- diluted
    
    
    37,481,000
    
    
    
    37,481,000
    
    
    
    37,481,000
    
    
    
    37,481,000
  4




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BERNARD
CHAUS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Nine Months EndedMarch 31,
    
    
    March 31,2010
    
    
    2009(Unaudited)Operating ActivitiesNet loss
    
    $
    (3,398
    )
    
    $
    (3,581
    )Adjustments to reconcile net loss to net cash
used in operating activities:Depreciation and amortization
    
    
    521
    
    
    
    924Loss on disposal of fixed assets
    
    
    43
    
    
    
    95Amortization of deferred income
    
    
    (267
    )
    
    
    Gain from insurance recovery
    
    
    
    
    
    
    (384
    )Proceeds from insurance recovery
    
    
    
    
    
    
    92Stock compensation expense
    
    
    21
    
    
    
    32Deferred income taxes
    
    
    21
    
    
    
    66Changes in operating assets and liabilities:Accounts receivable  factored
    
    
    (8,547
    )
    
    
    13,268Accounts receivable
    
    
    (1,647
    )
    
    
    (21,283
    )Inventories
    
    
    (2,986
    )
    
    
    (453
    )Prepaid expenses and other current assets
    
    
    (180
    )
    
    
    (147
    )Accounts payable
    
    
    9,865
    
    
    
    690Accrued expenses and long term liabilities
    
    
    369
    
    
    
    632Net cash used in operating activities
    
    
    (6,185
    )
    
    
    (10,049
    )Investing ActivitiesPurchases of fixed assets
    
    
    (464
    )
    
    
    (214
    )Proceeds from insurance recovery
    
    
    
    
    
    
    192Net cash used in investing activities
    
    
    (464
    )
    
    
    (22
    )Financing ActivitiesNet proceeds from revolving credit borrowings
    
    
    2,574
    
    
    
    10,505Proceeds from supply premium
    
    
    4,000
    
    
    
    Principal payments on term loan
    
    
    
    
    
    
    (425
    )Net cash provided by financing activities
    
    
    6,574
    
    
    
    10,080Increase (decrease) in cash
    
    
    (75
    )
    
    
    9Cash beginning of period
    
    
    126
    
    
    
    61Cash end of period
    
    $
    51
    
    
    $
    70Supplemental Disclosure of Cash Flow Information:Cash paid for:Taxes
    
    $
    14
    
    
    $
    23Interest
    
    $
    528
    
    
    $
    673
    5




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Business:
 ® ® ® ® ® ®
   Basis of Presentation:
  6




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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 Ended
    
    
    For the Nine Months EndedMarch 31,
    
    
    March 31,
    
    
    March 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Denominator for earnings (loss) per share (in millions):Denominator for basic earnings (loss) per share
weighted-average shares outstanding
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5Assumed exercise of potential common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted earnings (loss) per share
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5
  Fair Value of Financial Instruments:
  New Accounting Pronouncements:
     9




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March 31,
    
    
    June 30,
    
    
    March 31,2010
    
    
    2009
    
    2009(in thousands)(unaudited)
    
    
    (*)
    
    
    (unaudited)Raw materials
    
    $
    543
    
    
    $
    306
    
    
    $
    339Work-in-process
    
    
    213
    
    
    
    71
    
    
    
    142Finished goods
    
    
    6,069
    
    
    
    3,462
    
    
    
    7,454Total
    
    $
    6,825
    
    
    $
    3,839
    
    
    $
    7,935
 
 *
    
    Derived from the audited financial statements at June 30, 2009.       10




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Factoring Agreement
       For the Three Months Ended
    
    
    For the Nine Months EndedMarch 31,
    
    
    March 31,
    
    
    March 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(Unaudited)
    
    
    (Unaudited)(In Thousands)
    
    
    (In Thousands)Service cost
    
    $
    2
    
    
    $
    4
    
    
    $
    6
    
    
    $
    12Interest cost
    
    
    28
    
    
    
    28
    
    
    
    84
    
    
    
    84Expected return on plan assets
    
    
    (26
    )
    
    
    (32
    )
    
    
    (78
    )
    
    
    (96
    )Amortization of net loss
    
    
    20
    
    
    
    11
    
    
    
    60
    
    
    
    33Net periodic benefit cost
    
    $
    24
    
    
    $
    11
    
    
    $
    72
    
    
    $
    33
   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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Exclusive Supply Agreement
  Results of Operations
  For the Three Months Ended
    
    For the Nine Months EndedMarch 31,
    
    March 31,
    
    March 31,
    
    March 31,2010
    
    2009
    
    2010
    
    2009Net Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross Profit
    
    
    29.0
    %
    
    
    28.3
    %
    
    
    26.5
    %
    
    
    26.8
    %Selling, general and administrative expenses
    
    
    28.1
    %
    
    
    27.9
    %
    
    
    30.3
    %
    
    
    29.8
    %Interest expense
    
    
    0.8
    %
    
    
    0.7
    %
    
    
    0.8
    %
    
    
    0.8
    %Net income (loss)
    
    
    0.1
    %
    
    
    (0.4
    )%
    
    
    (4.7
    )%
    
    
    (3.8
    )%
   13




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14




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Financial Position, Liquidity and Capital Resources
 General
    Financing Agreement
   15




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Factoring Agreement
   Future Financing Requirements
  16




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Critical Accounting Policies and Estimates
      17




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 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. (Removed and Reserved).
 
 Item 5. Other Information.
  
 Item 6. Exhibits.
 31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-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 Operating Officer and Chief Financial Officer pursuant to
Rule 13a-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 David Stiffman, Chief
Operating Officer and Chief Financial Officer of Bernard Chaus, Inc.
 19




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SIGNATURES
  BERNARD CHAUS, INC.Date: May 07, 2010
    By:
    /s/ Josephine ChausJOSEPHINE CHAUSChairwoman of the Board and
     Chief Executive OfficerDate: May 07, 2010
    By:
    /s/ David StiffmanDAVID STIFFMANChief Operating Officer and
     Chief Financial Officer 20




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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 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 David Stiffman, Chief Operating Officer and Chief
Financial Officer of Bernard Chaus, Inc.
 21