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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 January 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
  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 10, 2011
    
    Common Stock, $0.01 par value
    
    34,481,373




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##### 



PAGEPART I FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements (Unaudited)Consolidated Balance Sheets as of January 1, 2011,

July 3, 2010 and December 31, 2009
    
    
    3Consolidated Statements of Operations for the

Three and Six Months Ended January 1, 2011 and December 31, 2009
    
    
    4Consolidated Statements of Cash Flows for the

Six Months Ended January 1, 2011 and December 31, 2009
    
    
    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
    
    
    21SIGNATURES
    
    
    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
 January 1,
    
    
    July 3,
    
    
    December 31,2011
    
    
    2010
    
    
    2009(Unaudited)
    
    
    ( * )
    
    
    (Unaudited)AssetsCurrent AssetsCash
    
    $
    3
    
    
    $
    4
    
    
    $
    149Accounts receivable  factored
    
    
    10,063
    
    
    
    19,404
    
    
    
    13,443Accounts receivable  net
    
    
    2,073
    
    
    
    1,789
    
    
    
    907Inventories  net
    
    
    6,819
    
    
    
    8,846
    
    
    
    4,187Prepaid expenses and other current assets
    
    
    974
    
    
    
    536
    
    
    
    532Total current assets
    
    
    19,932
    
    
    
    30,579
    
    
    
    19,218Fixed assets  net
    
    
    889
    
    
    
    885
    
    
    
    746Other assets
    
    
    3
    
    
    
    25
    
    
    
    91Trademarks
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Total assets
    
    $
    21,824
    
    
    $
    32,489
    
    
    $
    21,055Liabilities and Stockholders DeficiencyCurrent LiabilitiesRevolving credit borrowings
    
    $
    7,172
    
    
    $
    11,175
    
    
    $
    7,762Accounts payable
    
    
    17,160
    
    
    
    19,399
    
    
    
    8,559Accrued expenses
    
    
    1,162
    
    
    
    2,305
    
    
    
    2,392Total current liabilities
    
    
    25,494
    
    
    
    32,879
    
    
    
    18,713Deferred income
    
    
    3,034
    
    
    
    3,234
    
    
    
    3,433Long term liabilities
    
    
    1,812
    
    
    
    1,735
    
    
    
    1,556Deferred income taxes
    
    
    186
    
    
    
    173
    
    
    
    161Total liabilities
    
    
    30,526
    
    
    
    38,021
    
    
    
    23,863Stockholders 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 January 1,
2011, July 3, 2010 and
December 31, 2009
    
    
    375
    
    
    
    375
    
    
    
    375Additional paid-in capital
    
    
    133,441
    
    
    
    133,440
    
    
    
    133,434Deficit
    
    
    (139,998
    )
    
    
    (136,827
    )
    
    
    (134,208
    )Accumulated other comprehensive loss
    
    
    (1,040
    )
    
    
    (1,040
    )
    
    
    (929
    )Less: Treasury stock at cost 
62,270 shares at January 1, 2011, July 3, 2010 and
December 31, 2009
    
    
    (1,480
    )
    
    
    (1,480
    )
    
    
    (1,480
    )Total stockholders deficiency
    
    
    (8,702
    )
    
    $
    (5,532
    )
    
    
    (2,808
    )Total liabilities and stockholders deficiency
    
    $
    21,824
    
    
    $
    32,489
    
    
    $
    21,055
 
 *
    
    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 Six Months EndedJanuary 1,
    
    
    December 31,
    
    
    January 1,
    
    
    December 31,2011
    
    
    2009
    
    
    2011
    
    
    2009(Unaudited)
    
    
    (Unaudited)Net revenue
    
    $
    16,909
    
    
    $
    21,097
    
    
    $
    44,625
    
    
    $
    44,807Cost of goods sold
    
    
    14,855
    
    
    
    16,396
    
    
    
    35,978
    
    
    
    33,635Gross profit
    
    
    2,054
    
    
    
    4,701
    
    
    
    8,647
    
    
    
    11,172Selling, general and administrative expenses
    
    
    7,011
    
    
    
    6,955
    
    
    
    14,306
    
    
    
    14,206Accrued gain on early termination of license
agreement
    
    
    (1,033
    )
    
    
    
    
    
    
    (2,890
    )
    
    
    Loss from operations
    
    
    (3,924
    )
    
    
    (2,254
    )
    
    
    (2,769
    )
    
    
    (3,034
    )Interest expense
    
    
    177
    
    
    
    207
    
    
    
    378
    
    
    
    360Loss before income tax provision
    
    
    (4,101
    )
    
    
    (2,461
    )
    
    
    (3,147
    )
    
    
    (3,394
    )Income tax provision
    
    
    12
    
    
    
    10
    
    
    
    24
    
    
    
    20Net loss
    
    $
    (4,113
    )
    
    $
    (2,471
    )
    
    $
    (3,171
    )
    
    $
    (3,414
    )Basic loss per share
    
    $
    (0.11
    )
    
    $
    (0.07
    )
    
    $
    (0.08
    )
    
    $
    (0.09
    )Diluted loss per share
    
    $
    (0.11
    )
    
    $
    (0.07
    )
    
    $
    (0.08
    )
    
    $
    (0.09
    )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 Six Months EndedJanuary 1,
    
    
    December 31,2011
    
    
    2009(Unaudited)
    
    
    (Unaudited)Operating ActivitiesNet loss
    
    $
    (3,171
    )
    
    $
    (3,414
    )Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    175
    
    
    
    413Amortization of deferred income
    
    
    (200
    )
    
    
    (167
    )Stock compensation expense
    
    
    1
    
    
    
    18Deferred rent expense
    
    
    52
    
    
    
    211Deferred income taxes
    
    
    13
    
    
    
    14Changes in operating assets and liabilities:Accounts receivable  factored
    
    
    9,341
    
    
    
    (2,854
    )Accounts receivable
    
    
    (284
    )
    
    
    (700
    )Inventories
    
    
    2,027
    
    
    
    (348
    )Prepaid expenses and other assets
    
    
    (438
    )
    
    
    (226
    )Accounts payable
    
    
    (2,239
    )
    
    
    2,308Accrued expenses and long term liabilities
    
    
    (1,118
    )
    
    
    (122
    )Net cash provided by (used in) operating activities
    
    
    4,159
    
    
    
    (4,867
    )Investing ActivitiesPurchases of fixed assets
    
    
    (157
    )
    
    
    (266
    )Cash used in investing activities
    
    
    (157
    )
    
    
    (266
    )Financing ActivitiesNet proceeds from (repayments of) revolving
credit borrowings
    
    
    (4,003
    )
    
    
    1,156Proceeds from supply agreement
    
    
    
    
    
    
    4,000Cash provided by (used in) financing activities
    
    
    (4,003
    )
    
    
    5,156Increase (decrease) in cash
    
    
    (1
    )
    
    
    23Cash, beginning of year
    
    
    4
    
    
    
    126Cash, end of year
    
    $
    3
    
    
    $
    149Supplemental Disclosure of Cash Flow Information:Cash paid for:Taxes
    
    $
    13
    
    
    $
    13Interest
    
    $
    349
    
    
    $
    329
 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:
  Factoring Agreement and Accounts Receivable:
  7




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Inventories:
  Long-Lived Assets and Trademarks:
  Income Taxes:
  8




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Loss Per Share
  For the Three Months Ended
    
    For the Six Months EndedJanuary 1,
    
    December 31,
    
    January 1,
    
    December 31,Denominator for loss per share (in millions):
    
    2011
    
    2009
    
    2011
    
    2009Denominator for basic loss per share
weighted-average shares outstanding
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5Assumed exercise of potential common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted loss per share
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5
 Fair Value of Financial Instruments:
  New Accounting Pronouncements:
   9




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January 1,
    
    
    July 3,
    
    
    December 31,2011
    
    
    2010
    
    
    2009(in thousands)(unaudited)
    
    
    (*)
    
    
    (unaudited)Raw materials
    
    $
    379
    
    
    $
    457
    
    
    $
    416Work-in-process
    
    
    57
    
    
    
    63
    
    
    
    115Finished goods
    
    
    6,383
    
    
    
    8,326
    
    
    
    3,656Total
    
    $
    6,819
    
    
    $
    8,846
    
    
    $
    4,187
 
 *
    
    Derived from the audited financial statements at July 3, 2010.       10




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Factoring Agreement
      For the Three Months Ended
    
    
    For the Six Months EndedJanuary 1,
    
    
    December 31,
    
    
    January 1,
    
    
    December 31,2011
    
    
    2009
    
    
    2011
    
    
    2009(Unaudited)
    
    
    (Unaudited)(In Thousands)
    
    
    (In Thousands)Service cost
    
    $
    2
    
    
    $
    2
    
    
    $
    4
    
    
    $
    4Interest cost
    
    
    28
    
    
    
    28
    
    
    
    56
    
    
    
    56Expected return on plan assets
    
    
    (26
    )
    
    
    (26
    )
    
    
    (52
    )
    
    
    (52
    )Amortization of net loss
    
    
    9
    
    
    
    20
    
    
    
    18
    
    
    
    40Net periodic benefit cost
    
    $
    13
    
    
    $
    24
    
    
    $
    26
    
    
    $
    48
   11




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Fiscal year ending:
    
    Amount(in thousands)2011
    
    $
    02012
    
    
    2,1402013
    
    
    1,3502014
    
    
    1,6352015
    
    
    1,8602016
    
    
    975Total
    
    $
    7,960
  .
 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 Six Months EndedJanuary 1,
    
    December 31,
    
    January 1,
    
    December 31,2011
    
    2009
    
    2011
    
    2009Net Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross Profit
    
    
    12.2
    %
    
    
    22.3
    %
    
    
    19.4
    %
    
    
    24.9
    %Selling, general and administrative expenses
    
    
    41.5
    %
    
    
    33.0
    %
    
    
    32.1
    %
    
    
    31.7
    %Accrued gain on early termination of license agreement
    
    
    (6.1)
    %
    
    
    
    %
    
    
    (6.5)
    %
    
    
    
    %Interest expense
    
    
    1.1
    %
    
    
    1.0
    %
    
    
    0.8
    %
    
    
    0.8
    %Net loss
    
    
    (24.3
    )%
    
    
    (11.7
    )%
    
    
    (7.1
    )%
    
    
    (7.6
    )%
    14




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15




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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.
 (a)
    
    The Annual Meeting of Stockholders of the Company was held on December 7, 2010 at 11:00 a.m.(c)
    
    At such meeting, the Stockholders voted on the election of four directors of the Company to
serve until the next Annual Meeting of Stockholders and until their respective successors
have been elected and qualified.
 For
    
    
    
    WithheldPhilip G. Barach
    
    
    33,711,344
    
    
    
    220,448David Stiffman
    
    
    33,663,149
    
    
    
    268,643Josephine Chaus
    
    
    33,662,650
    
    
    
    269,142Robert Flug
    
    
    33,451,623
    
    
    
    480,169
 
 Item 5. Other Information.
  20




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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.
 
 SIGNATURES
  BERNARD CHAUS, INC.Date:    February 10, 2011
    By:
    /s/ Josephine ChausJOSEPHINE CHAUSChairwoman of the Board, and
Chief Executive OfficerDate: February 10, 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