##### 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, 2009.
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
 For the transition period fromto.
 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)
 (212) 354-1280
 
  þ o
 o o
  o o o þ
  o þ
  Date
    
    Class
    
    Shares OutstandingMay 13, 2009
    
    Common Stock, $0.01 par value
    
    37,481,373




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##### 



PART I  FINANCIAL INFORMATIONItem 1. Financial Statements.Consolidated Balance Sheets as of March 31, 2009, June 30, 2008 and March 31, 2008
    
    
    3Consolidated Statements of Operations for the Three and Nine Months ended March 31, 2009 and 2008
    
    
    4Consolidated Statements of Cash Flows for the Nine Months ended March 31, 2009 and 2008
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    14Item 3. Quantitative and Qualitative Disclosures About Market Risk.
    
    
    20Item 4. Controls and Procedures.
    
    
    21PART II  OTHER INFORMATION
    
    
    22Item 1. Legal Proceedings.
    
    
    22Item 1A. Risk Factors.
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
    
    
    22Item 3. Defaults Upon Senior Securities.
    
    
    22Item 4. Submission of Matters to a Vote of Security Holders.
    
    
    22Item 5. Other Information.
    
    
    22Item 6. Exhibits.
    
    
    22SIGNATURES
    
    
    23CERTIFICATIONSEX-31.1: CERTIFICATIONEX 31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATIONEX-10.1EX-10.2EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 BERNARD CHAUS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  March 31,
    
    
    June 30,
    
    
    March 31,2009
    
    
    2008
    
    
    2008(Unaudited)
    
    
    (*)
    
    
    (Unaudited)AssetsCurrent AssetsCash
    
    $
    70
    
    
    $
    61
    
    
    $
    72Accounts receivable  net
    
    
    82
    
    
    
    13,350
    
    
    
    20,152Due from factor
    
    
    22,122
    
    
    
    839
    
    
    
    1,091Inventories  net
    
    
    7,935
    
    
    
    7,482
    
    
    
    7,206Prepaid expenses and other current assets
    
    
    753
    
    
    
    596
    
    
    
    660Total current assets
    
    
    30,962
    
    
    
    22,328
    
    
    
    29,181Fixed assets  net
    
    
    1,276
    
    
    
    2,053
    
    
    
    2,153Other assets
    
    
    174
    
    
    
    112
    
    
    
    114Trademarks
    
    
    1,000
    
    
    
    1,000
    
    
    
    1,000Goodwill
    
    
    2,257
    
    
    
    2,257
    
    
    
    2,257Total assets
    
    $
    35,669
    
    
    $
    27,750
    
    
    $
    34,705Liabilities and Stockholders EquityCurrent LiabilitiesRevolving credit borrowings
    
    $
    17,103
    
    
    $
    4,798
    
    
    $
    8,454Accounts payable
    
    
    7,534
    
    
    
    6,844
    
    
    
    6,038Accrued expenses
    
    
    2,893
    
    
    
    2,585
    
    
    
    3,072Term loan  current
    
    
    
    
    
    
    2,225
    
    
    
    2,650Total current liabilities
    
    
    27,530
    
    
    
    16,452
    
    
    
    20,214Long term liabilities
    
    
    710
    
    
    
    386
    
    
    
    252Deferred income taxes
    
    
    528
    
    
    
    462
    
    
    
    442Total liabilities
    
    
    28,768
    
    
    
    17,300
    
    
    
    20,908Stockholders EquityPreferred stock, $0.01 par value, authorized shares  1,000,000;
issued and outstanding shares  none
    
    
    
    
    
    
    
    
    
    
    Common stock, $0.01 par value, authorized shares  50,000,000; issued
shares  37,543,643 at March 31, 2009, June 30, 2008
and March 31, 2008
    
    
    375
    
    
    
    375
    
    
    
    375Additional paid-in capital
    
    
    133,405
    
    
    
    133,373
    
    
    
    133,358Deficit
    
    
    (124,798
    )
    
    
    (121,217
    )
    
    
    (118,022
    )Accumulated other comprehensive loss
    
    
    (601
    )
    
    
    (601
    )
    
    
    (434
    )Less: treasury stock at cost  62,270 shares at March 31, 2009, June
30, 2008 and March 31, 2008
    
    
    (1,480
    )
    
    
    (1,480
    )
    
    
    (1,480
    )Total stockholders equity
    
    
    6,901
    
    
    
    10,450
    
    
    
    13,797Total liabilities and stockholders equity
    
    $
    35,669
    
    
    $
    27,750
    
    
    $
    34,705
 
 *
    
    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 Ended
    
    
    For the Nine Months EndedMarch 31,
    
    
    March 31,
    
    
    March 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)
    
    
    (Unaudited)Net revenue
    
    $
    33,107
    
    
    $
    32,686
    
    
    $
    93,054
    
    
    $
    93,608Cost of goods sold
    
    
    23,729
    
    
    
    22,408
    
    
    
    68,085
    
    
    
    67,655Gross profit
    
    
    9,378
    
    
    
    10,278
    
    
    
    24,969
    
    
    
    25,953Selling, general and administrative expenses
    
    
    9,265
    
    
    
    9,768
    
    
    
    27,726
    
    
    
    29,594Income (loss) from operations
    
    
    113
    
    
    
    510
    
    
    
    (2,757
    )
    
    
    (3,641
    )Interest expense, net
    
    
    207
    
    
    
    220
    
    
    
    729
    
    
    
    747Income (loss) before income tax provision
    
    
    (94
    )
    
    
    290
    
    
    
    (3,486
    )
    
    
    (4,388
    )Income tax provision
    
    
    32
    
    
    
    30
    
    
    
    95
    
    
    
    95Net income (loss)
    
    $
    (126
    )
    
    $
    260
    
    
    $
    (3,581
    )
    
    $
    (4,483
    )Basic earnings (loss) per share
    
    $
    (0.00
    )
    
    $
    0.01
    
    
    $
    (0.10
    )
    
    $
    (0.12
    )Diluted earnings (loss) per share
    
    $
    (0.00
    )
    
    $
    0.01
    
    
    $
    (0.10
    )
    
    $
    (0.12
    )Weighted average number of shares
outstanding- basic
    
    
    37,481,000
    
    
    
    37,473,000
    
    
    
    37,481,000
    
    
    
    37,412,000Weighted average number of common and
common equivalent shares outstanding-
diluted
    
    
    37,481,000
    
    
    
    37,476,000
    
    
    
    37,481,000
    
    
    
    37,412,000
  4




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BERNARD CHAUS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Nine Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008(Unaudited)Operating ActivitiesNet loss
    
    $
    (3,581
    )
    
    $
    (4,483
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    924
    
    
    
    940Loss on disposal of fixed assets
    
    
    95
    
    
    
    Stock compensation expense
    
    
    32
    
    
    
    28Gain from insurance recovery
    
    
    (384
    )
    
    
    Proceeds from insurance recovery
    
    
    92
    
    
    
    Deferred income taxes
    
    
    66
    
    
    
    69Changes in operating assets and liabilities:Accounts receivable
    
    
    13,268
    
    
    
    (3,547
    )Due from factor
    
    
    (21,283
    )
    
    
    547Inventories
    
    
    (453
    )
    
    
    1,670Prepaid expenses and other current assets
    
    
    (147
    )
    
    
    (9
    )Accounts payable
    
    
    690
    
    
    
    (3,974
    )Accrued expenses and long term liabilities
    
    
    632
    
    
    
    (1,605
    )Net Cash Used in Operating Activities
    
    
    (10,049
    )
    
    
    (10,364
    )Investing ActivitiesPurchases of fixed assets
    
    
    (214
    )
    
    
    (120
    )Proceeds from insurance recovery
    
    
    192
    
    
    
    Net Cash Used in Investing Activities
    
    
    (22
    )
    
    
    (120
    )Financing ActivitiesNet proceeds from revolving credit borrowings
    
    
    10,505
    
    
    
    8,454Principal payments on term loan
    
    
    (425
    )
    
    
    (1,275
    )Net Cash Provided by Financing Activities
    
    
    10,080
    
    
    
    7,179Increase (decrease) in cash and cash equivalents
    
    
    9
    
    
    
    (3,305
    )Cash and cash equivalents, beginning of period
    
    
    61
    
    
    
    3,377Cash and cash equivalents, end of period
    
    $
    70
    
    
    $
    72Supplemental Disclosure of Cash Flow Information:Cash paid for:Taxes
    
    $
    23
    
    
    $
    44Interest
    
    $
    673
    
    
    $
    710
    5




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




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Revenue Recognition:
  Due from Factor and Accounts Receivable:
  Inventories:
  Cash and Cash Equivalents:
  7




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Long Lived Assets, Trademarks and Goodwill :
  Income Taxes:
   Earnings (loss) Per Share:
  8




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For the Three Months
    
    
    For the Nine MonthsEnded
    
    
    EndedMarch 31,
    
    
    March 31,
    
    
    March 31,

    
    
    March 31,Denominator for earnings (loss) per share (in millions):
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Denominator
for basic earnings (loss) per share weighted-average shares outstanding
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.4Assumed exercise of potential common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Denominator for diluted earnings (loss) per share
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.5
    
    
    
    37.4
  New Accounting Pronouncements:
    9




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10




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March 31,
    
    
    June 30,
    
    
    March 31,2009
    
    
    2008
    
    
    2008(unaudited)

    
    
    (in thousands)
    
    
    (unaudited)(*)Raw materials
    
    $
    339
    
    
    $
    172
    
    
    $
    292Work-in-process
    
    
    142
    
    
    
    29
    
    
    
    65Finished goods
    
    
    7,453
    
    
    
    7,281
    
    
    
    6,849Total
    
    $
    7,934
    
    
    $
    7,482
    
    
    $
    7,206
 
 *
    
    Derived from audited financial statements at June 30, 2008.       11




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Factoring Agreement
   12




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For the Three Months
    
    
    For the Nine MonthsEnded
    
    
    EndedMarch 31,
    
    
    March 31,
    
    
    March 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)
    
    
    (Unaudited)(In Thousands)
    
    
    (In Thousands)Service cost
    
    $
    4
    
    
    $
    6
    
    
    $
    12
    
    
    $
    18Interest cost
    
    
    28
    
    
    
    27
    
    
    
    84
    
    
    
    81Expected return on plan assets
    
    
    (32
    )
    
    
    (33
    )
    
    
    (96
    )
    
    
    (99
    )Amortization of net loss
    
    
    11
    
    
    
    6
    
    
    
    33
    
    
    
    18Net periodic benefit cost
    
    $
    11
    
    
    $
    6
    
    
    $
    33
    
    
    $
    18
   13




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Forward-looking Statements
     Overview
 ® ® ® ® ®
 14




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Results of Operations
  For the Three Months Ended
    
    For the Nine Months EndedMarch 31,
    
    March 31,
    
    March 31,
    
    March 31,2009
    
    2008
    
    2009
    
    2008Net Revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross Profit
    
    
    28.3
    %
    
    
    31.4
    %
    
    
    26.8
    %
    
    
    27.7
    %Selling, general
and administrative
expenses
    
    
    28.0
    %
    
    
    29.9
    %
    
    
    29.8
    %
    
    
    31.6
    %Interest expense
    
    
    0.6
    %
    
    
    0.7
    %
    
    
    0.8
    %
    
    
    0.8
    %Net income (loss)
    
    
    (0.4
    )%
    
    
    0.8
    %
    
    
    (3.8
    )%
    
    
    (4.8
    )%
    15




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16




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Financial Position, Liquidity and Capital Resources
 General
    Financing Agreement
    17




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Future Financing Requirements
    Factoring Agreement
 Future Financing Requirements
  Future Financing Requirements
  18




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Critical Accounting Policies and Estimates
    19




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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  20




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Item 4. Controls and Procedures.
    21




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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.
 10.1
    
    Amendment to the Financing Agreement by and among Bernard
Chaus, Inc., Cynthia Steffe Acquisition LLC, S.L. Danielle
Acquisition, LLC and The CIT Group/Commercial Services, Inc., dated
May 12, 2009.10.2
    
    Amendment to the Factoring Agreement by and among Bernard
Chaus, Inc., Cynthia Steffe Acquisition LLC, S.L. Danielle
Acquisition, LLC and The CIT Group/Commercial Services, Inc., dated
May 12, 2009.31.1
    
    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 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.
 
 22




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SIGNATURES
  BERNARD CHAUS, INC.
(Registrant)Date:
May 13, 2009
    
    By:
    
    /s/ Josephine ChausJOSEPHINE CHAUSChairwoman of the Board and Chief Executive OfficerDate:
May 13, 2009
    
    By:
    
    /s/ David StiffmanDAVID STIFFMANChief Operating OfficerDate:
May 13, 2009
    
    By:
    
    /s/ Barton HeminoverBARTON HEMINOVERChief Financial Officer
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INDEX TO EXHIBITS
 ExhibitNumber
    
    Exhibit Title10.1
    
    Amendment to the Financing Agreement by and among Bernard
Chaus, Inc., Cynthia Steffe Acquisition LLC, S.L. Danielle
Acquisition, LLC and The CIT Group/Commercial Services, Inc., dated
May 12, 2009.10.2
    
    Amendment to the Factoring Agreement by and among Bernard
Chaus, Inc., Cynthia Steffe Acquisition LLC, S.L. Danielle
Acquisition, LLC and The CIT Group/Commercial Services, Inc., dated
May 12, 2009.31.1
    
    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 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.
 24