SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
-----------
FORM 10-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended December 31, 1994
---------------------------------
OR
[ ] 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.
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(Exact name of registrant as specified in its charter)
New York 13-2807386
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(State or other jurisdiction (I.R.S. employer identification number)
of incorporation or organization)
1410 Broadway, New York, New York 10018
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 354-1280
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Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days Yes X No ____.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date
Date Class Shares Outstanding
- - ----------------- ----------------------------- ------------------
February 3, 1995 Common Stock, $0.01 par value 20,311,831
- - ----------------- ----------------------------- ------------------
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements (Unaudited): PAGE
<S> <C>
Condensed Consolidated Balance Sheets as
of December 31, 1994, June 30, 1994
and December 31, 1993 ......................... 3
Condensed Consolidated Statements of
Operations for the Six Months and Quarters
ended December 31, 1994 and 1993 .............. 4
Condensed Consolidated Statements of Cash Flows
for the Six Months ended December 31, 1994
and 1993....................................... 5
Notes to Condensed Consolidated Financial
Statements .................................... 6 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations..................................... 8 - 11
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security
Holders........................................ 11 - 12
Item 6. Exhibits and Reports on Form 8-K .............. 12
SIGNATURES ...................................................... 13
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
BERNARD CHAUS, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Information)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30, DECEMBER 31,
1994 1994 1993
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<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents ........................ $ 847 $ 468 $ 534
Accounts receivable - net ........................ 9,747 17,757 22,558
Inventories ...................................... 14,983 25,503 30,545
Prepaid expenses and other current assets ........ 1,413 3,608 3,336
Refundable and prepaid income taxes .............. 135 631
----------- ---------- ---------
Total Current Assets ........................... 26,990 47,471 57,604
Fixed Assets ....................................... 3,205 3,612 5,668
Other Assets ....................................... 537 536 970
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$30,732 $51,619 $64,242
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----------- ---------- ---------
LIABILITIES AND STOCKHOLDERS'(DEFICIT) EQUITY
Current Liabilities
Notes payable - bank ............................. $11,943 $21,115 $ 3,829
Subordinated Promissory Notes - current .......... 250 500
Accounts payable ................................. 9,726 14,290 14,265
Accrued expenses ................................. 5,076 6,710 5,007
Accrued restructuring expenses ................... 2,101 1,764
----------- ---------- ---------
Total Current Liabilities ..................... 28,846 44,129 23,601
Accrued Restructuring Expenses ..................... 1,923 2,315
Subordinated Promissory Notes ...................... 19,906 18,789 17,717
----------- ---------- ---------
50,675 65,233 41,318
Stockholders' (Deficit) Equity
Preferred stock, $.01 par value;
authorized shares -- 1,000,000;
outstanding shares -- none
Common stock, $.01 par value;
authorized shares -- 50,000,000;
issued shares -- 20,934,531 at December 31, 1994,
18,975,031 at June 30, 1994 and
December 31, 1993 ............................... 209 190 190
Additional paid-in capital ....................... 47,734 40,226 40,226
(Deficit) ........................................ (66,406) (52,550) (16,012)
Less: Treasury stock, at cost --
622,700 shares ............................. (1,480) (1,480) (1,480)
----------- ---------- ---------
Total Stockholders' (Deficit) Equity .......... (19,943) (13,614) 22,924
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$30,732 $51,619 $64,242
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----------- ---------- ---------
</TABLE>
Note: The balance sheet at June 30, 1994 has been derived from the audited
financial statements at that date. See notes to condensed consolidated
financial statements.
3
BERNARD CHAUS, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - (Unaudited)
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE QUARTER ENDED
---------------------------- -----------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1993 1994 1993
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Net sales ........................................ $111,938 $120,309 $ 46,547 $ 50,709
Cost of goods sold ............................... 90,943 101,125 39,241 44,643
---------- ---------- ---------- ----------
Gross profit .................................. 20,995 19,184 7,306 6,066
Selling, general and
administrative expenses ......................... 23,147 27,582 10,947 13,748
Restructuring expenses ........................... 1,200
Unusual expenses ................................. 7,833
---------- ---------- ---------- ----------
(11,185) (8,398) (3,641) (7,682)
Interest and other income (expense), net ......... 8 (8) (27) (6)
Interest expense ................................. (2,528) (1,698) (1,178) (756)
---------- ---------- ---------- ----------
Loss before provision for income taxes ........... (13,705) (10,104) (4,846) (8,444)
Provision for income taxes ....................... 151 113 75 76
---------- ---------- ---------- ----------
Net loss ........................................ ($13,856) ($10,217) ($4,921) ($8,520)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net loss per common share ....................... ($0.71) ($0.56) ($0.24) ($0.46)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average number of common and
common equivalent shares outstanding .......... 19,509 18,352 20,300 18,352
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See notes to condensed consolidated financial statements.
4
BERNARD CHAUS, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
----------------------------
DECEMBER 31, DECEMBER 31,
1994 1993
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<S> <C> <C>
OPERATING ACTIVITIES
Net loss ................................................ ($13,856) ($10,217)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization ......................... 672 927
Provision for losses on accounts receivable ........... 165 50
Deferred interest on subordinated promissory notes .... 1,117 864
Changes in operating assets and liabilities:
Accounts receivable ................................. 7,845 7,954
Inventories ......................................... 10,520 15,429
Prepaid expenses and other assets ................... 2,194 1,345
Income taxes receivable ............................. 135 91
Accounts payable .................................... (4,564) (5,224)
Accrued restructuring expenses ...................... (55)
Accrued expenses .................................... (1,634) (331)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES ................. 2,539 10,888
INVESTING ACTIVITIES
Purchases of fixed assets .............................. (265) (663)
FINANCING ACTIVITIES
Net repayments of short term bank borrowings ........... (9,172) (11,052)
Principal payments on subordinated promissory notes .... (250)
Net proceeds from sale of stock ........................ 7,527 (6)
----------- -----------
NET CASH USED IN FINANCING ACTIVITIES ..................... (1,895) (11,058)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...... 379 (833)
Cash and cash equivalents at beginning of period .......... 468 1,367
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................ $ 847 $ 534
----------- -----------
----------- -----------
Supplemental cash information
Cash paid for:
Taxes ............................................. $ 5 $ 23
Interest .......................................... $ 1,196 $ 757
</TABLE>
See notes to condensed consolidated financial statements.
5
BERNARD CHAUS, INC. and SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
December 31, 1994
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the quarter and six months ended December
31, 1994 are not necessarily indicative of the results that may be expected for
the fiscal year 1995. For further information, refer to the financial statements
and footnotes thereto included in the Company's annual report on Form 10-K for
the year ended June 30, 1994.
Net Loss Per Share: Net loss per share for the three and six months ended
December 31 has been computed by dividing the applicable net loss by the
weighted average number of common shares outstanding. Common equivalent shares
were not considered as the inclusion of such would have been antidilutive.
NOTE 2. INVENTORIES
Inventories (principally finished goods) are stated at the lower of cost, using
the first-in first-out (FIFO) method, or market.
Inventories included merchandise in transit of approximately $6,429,000 at
December 31, 1994, $11,176,000 at June 30, 1994 and $9,414,000 at December 31,
1993.
NOTE 3: U. S. CUSTOMS SETTLEMENT
A letter from the U.S. Customs Service was received in November 1994, notifying
the Company that the offered amount of $500,000 tendered in December 1991 as an
offer-in-compromise has been accepted in full settlement of any and all claims
against the Company arising from a Customs Audit for the period through fiscal
1986. Such liability had been provided for in a prior year.
NOTE 4: FINANCIAL AGREEMENTS
The Company has in place a Restated and Amended Financing Agreement (the
"Financing Agreement") with BNY Financial Corporation ("BNYF" or the "Bank"), a
wholly owned subsidiary of The Bank of New York.
6
BERNARD CHAUS, INC. and SUBSIDIARIES
During the first and second quarters of fiscal year 1995, the Company was not in
compliance with certain financial covenants. BNYF has waived such noncompliance.
The Company is currently negotiating with BNYF for a new three year facility.
The Company believes that this negotiation will be successfully completed in the
near future. However, there can be no assurance that an agreement on a new
facility will be reached.
The Company required availability under its working capital credit line with
BNYF in excess of the amount available under its borrowing base formula. To
assist the Company, Josephine Chaus agreed to provide credit support in the form
of a letter of credit. She initially provided a letter of credit in the amount
of $3 million on April 15, 1994 which was increased to $5 million on June 14,
1994 and further increased to $7.2 million on September 13, 1994. The expiration
date of the letter of credit, initially in effect through October 15, 1994, was
extended to April 15, 1995 (the "Extension"). The Bank has increased the
Company's borrowing availability by various amounts as the amount and expiration
date of the letter of credit has been increased and extended. In February 1995,
Josephine Chaus agreed to increase the amount of the letter of credit to $10
million and, subject to reaching agreement with the Bank on a new three year
facility, to extend the expiration date of the Letter of Credit until October
31, 1995. Any consideration to be paid to Josephine Chaus for such increase and
extension will be considered by a Special Committee of the Company's Board of
Directors (the "Special Committee").
In September 1994, Josephine Chaus loaned $7.2 million to the Company in
exchange for promissory notes bearing interest at 12% per annum. Proceeds of
such cash infusion were used for costs and associated expenses related to the
signing of the Company's new chief executive officer. In November 1994,
following approval by the Company's shareholders, Josephine Chaus exchanged such
notes, including accrued interest thereon, for 1,914,500 shares of the Company's
Common Stock (based upon a purchase price of $3.85 per share). The purchase
price was determined by the Special Committee and the purchase was approved by
the Company's shareholders at the November 22, 1994 Annual Meeting of
Shareholders.
In approving the sale of the shares of Common Stock the Special Committee sought
the advice of Lehman Brothers, which provided its view as to the commercial
reasonableness of the transaction.
NOTE 5: SUBORDINATED PROMISSORY NOTES
The Company has outstanding at December 31, 1994 $19,906,000 of subordinated
promissory notes payable to Josephine Chaus certain of which were originally
issued on June 30, 1986 and the remainder of which were issued in February and
March 1991 (the "Subordinated Notes"). The Company has been unable to make
payments of principal or interest on the Subordinated Notes since 1993 (with the
exception of principal payments of $500,000, $250,000 and $250,000 in November
1993, February 1994 and August 1994, respectively) as a result of restrictive
covenants under the Financing Agreement. In January 1995, Josephine Chaus
extended the maturity date on all of the Subordinated Notes to January 1, 1996.
7
BERNARD CHAUS, INC. AND SUBSIDIARIES
NOTE 6: RESTRUCTURING AND UNUSUAL EXPENSES
During the six months ended December 31, 1994, the Company initiated a number of
actions to strengthen its financial position, including a cash infusion of $7.2
million from its principal shareholder, cost reductions largely related to
additional layoffs in the Company's U.S. and overseas offices, and the hiring of
the Company's new Chief Executive Officer. The Company believes these actions
will have a positive impact on future operating results.
Relative to the aforementioned programs, during the first fiscal quarter of 1995
the Company recorded restructuring expenses of $1.2 million. These costs
primarily relate to employee severance as the Company continues to reduce
overhead costs.
In addition, for the first fiscal quarter the Company recorded unusual expenses
of $7.8 million primarily related to the signing of the Company's new Chief
Executive Officer.
In January 1995, the Company signed favorable early termination agreements with
the landlords of certain retail outlet stores, for which the Company had
previously taken a reserve as part of its restructuring expenses at June 30,
1994. As a result, the Company was able to reduce its restructuring expenses by
approximately $1.3 million. The benefit of this reduction was offset, however,
by certain additional expenses provided by the Company related to its retail and
overseas operations.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Operating results for the periods ended December 31, 1994 are not necessarily
indicative of the results that may be expected for the fiscal year 1995.
For the six months ended December 31, 1994, net sales decreased by $8.4 million
or 7.0% compared to the corresponding period ended December 31, 1993. The sales
decrease is primarily due to a reduction in the number of units sold, lower
standard selling prices, higher returns, discounts and promotional allowances,
partially offset by lower discounts from standard selling prices. The
promotional allowances are to accelerate and increase sell-through at the retail
level. For the first six months of fiscal 1995, promotional allowances remain
high. As a result, significant reserves have been maintained by the Company as a
reduction to accounts receivable.
For the quarter ended December 31, 1994, net sales decreased by $4.2 million, or
8.2%, compared to the corresponding period ending December 31, 1993. The sales
decrease is primarily due to a reduction in the number of units sold, lower
standard selling prices, higher returns, discounts and promotional allowances,
partially offset by lower discounts from standard selling prices.
For the six months ended December 31, 1994, cost of goods sold as a percent of
net sales decreased to 81.2% from 84.1% for the same period of fiscal 1994. For
the three months ended December 31, 1994, the cost of goods sold as a percent of
net sales decreased to 84.3%, from 88.0% for the same period of fiscal 1994. For
both periods, the decrease in costs, as a percent of net
8
BERNARD CHAUS, INC. and SUBSIDIARIES
sales, came from an increase in the proportion of net sales made either at
standard selling price or at a lower discount from standard selling price.
Selling, general and administrative expenses, as a percent of net sales,
decreased to 20.7% for the six months ended December 31, 1994 from 22.9% for the
comparable period last year. Selling, general and administrative expenses, as a
percent of net sales, decreased to 23.5% for the second quarter ended December
31, 1994 from 27.1% for the comparable period last year. For both the six month
period and quarter ended December 31, 1994, the actual dollar expense decrease
of $4.4 million and $2.8 million, respectively, was attributable to the
implementation of cost reduction programs.
For the six months ended December 31, 1994, the Company initiated a number of
actions to strengthen its financial position, including a cash infusion of $7.2
million from its principal shareholder, cost reductions largely related to
additional layoffs in the Company's U.S. and overseas offices, and the hiring of
the Company's new Chief Executive Officer. The Company believes these actions
will have a positive impact on future operating results.
Relative to the aforementioned programs, during the first fiscal quarter of 1995
the Company recorded restructuring expenses of $1.2 million. These costs
primarily relate to employee severance as the Company continues to reduce
overhead costs.
In addition, for the first fiscal quarter the Company recorded unusual expenses
of $7.8 million primarily related to the signing of the Company's new Chief
Executive Officer.
In January 1995, the Company signed favorable early termination agreements with
the landlords of certain retail outlet stores, for which the Company had
previously taken a reserve as part of its restructuring expenses at June 30,
1994. As a result, the Company was able to reduce its restructuring expenses by
approximately $1.3 million. The benefit of this reduction was offset, however,
by certain additional expenses provided by the Company related to its retail and
overseas operations.
Interest expense increased for both the six month and quarter periods compared
with last year, primarily due to higher bank borrowings, the $7.2 million
promissory notes and higher interest rates on borrowings.
Financial Position, Liquidity and Capital Resources
Net cash provided by operating activities was $2.5 million for the six months
ended December 31, 1994 as compared to $10.9 million for the six months ended
December 31, 1993. Net cash provided by operating activities resulted primarily
from decreases in accounts receivable ($8.0 million), prepaid expenses ($2.2
million) and inventories ($10.5 million), offset somewhat by the net loss ($13.9
million) and reductions in accounts payable ($4.6 million).
The Company's anticipated capital expenditures for the balance of fiscal 1995
are approximately $.5 million, consisting primarily of expenditures for its
warehouses, design facilities and the purchase of additional computer software
systems.
9
BERNARD CHAUS, INC. and SUBSIDIARIES
The Company's operations over the past several years have been financed
primarily through the use of internally generated funds, subordinated debt,
lines of credit and the aforementioned equity infusion from Josephine Chaus. The
Company anticipates that its future operations will be financed in the same
manner, but will also explore additional sources of financing.
The Company has in place a Restated and Amended Financing Agreement (the
"Financing Agreement") with BNYF. During the first and second quarters of fiscal
year 1995, the Company was not in compliance with certain financial covenants.
BNYF has waived such noncompliance.
The Company is currently negotiating with BNYF for a new three year facility.
The Company believes that this negotiation will be successfully completed in the
near future. However, there can be no assurance that an agreement on a new
facility will be reached.
The Company required availability under its working capital credit line with
BNYF in excess of the amount available under its borrowing base formula. To
assist the Company, Josephine Chaus agreed to provide credit support in the form
of a letter of credit. She initially provided a letter of credit in the amount
of $3 million on April 15, 1994 which was increased to $5 million on June 14,
1994 and further increased to $7.2 million on September 13, 1994. The expiration
date of the letter of credit, initially in effect through October 15, 1994, was
extended to April 15, 1995 (the "Extension"). The Bank has increased the
Company's borrowing availability by various amounts as the amount and expiration
date of the letter of credit has been increased and extended.
In consideration for her provision of credit support to the Company, a Special
Committee of the Board of Directors authorized the issuance to Josephine Chaus
of an aggregate of 1,216,500 warrants at exercise prices ranging from $2.25 to
$4.62. The Company has borne all out-of-pocket expenses incurred by Josephine
Chaus in providing the letter of credit. Josephine Chaus has agreed to forfeit a
pro rata portion of the Extension Warrants if the letter of credit is terminated
before April 15, 1995. In approving such warrants, the Special Committee sought
the advice of Lehman Brothers, which provided its view as to the commercial
reasonableness of the transaction. Approval of the issuance to Josephine Chaus
of the Warrants was granted at the Company's Annual Meeting of Shareholders on
November 22, 1994.
In February 1995, Josephine Chaus agreed to increase the amount of the letter of
credit to $10 million and, subject to reaching agreement with the Bank on a new
three year facility, to extend the expiration date of the Letter of Credit until
October 31, 1995. Any consideration to be paid to Josephine Chaus for such
increase and extension will be considered by the Special Committee.
In September 1994, Josephine Chaus loaned $7.2 million to the Company in
exchange for promissory notes bearing interest at 12% per annum. Proceeds of
such cash infusion were used for costs and associated expenses related to the
signing of the Company's new chief executive officer. In November 1994,
following approval by the Company's shareholders, Josephine Chaus exchanged such
notes, including accrued interest thereon, for 1,914,500 shares of the Company's
Common Stock (based upon a purchase price of $3.85 per share). The purchase
price was determined by a special committee of the Company's Board
10
BERNARD CHAUS, INC. and SUBSIDIARIES
of Directors and the purchase was approved by the Company's shareholders at the
November 22, 1994 Annual Meeting of Shareholders.
In approving the sale of the shares of Common Stock the Special Committee sought
the advice of Lehman Brothers, which provided its view as to the commercial
reasonableness of the transaction.
The Company has outstanding at December 31, 1994 $19,906,000 of subordinated
promissory notes payable to Josephine Chaus certain of which were originally
issued on June 30, 1986 and the remainder of which were issued in February and
March 1991 (the "Subordinated Notes"). The Company has been unable to make
payments of principal or interest on the Subordinated Notes since 1993 (with the
exception of principal payments of $500,000, $250,000 and $250,000 in November
1993, February 1994 and August 1994, respectively) as a result of restrictive
covenants under the Financing Agreement. In January 1995, Josephine Chaus
extended the maturity date on all of the Subordinated Notes to January 1, 1996.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company's Annual Meeting of Shareholders was held on November 22,
1994.
(b) The directors of the Company elected at the Annual Meeting of
Shareholders held on November 22, 1994, were as follows: Josephine Chaus, Andrew
Grossman, S. Lee Kling, John W. Burden III, Harvey M. Krueger and Philip G.
Barach. The term of office of the directors is until the next Annual Meeting of
Shareholders and until their respective successors have been elected and
qualified.
(c) The matters voted upon at the Annual Meeting of Shareholders, other
than the election of directors and approval of auditors, and the number of
affirmative votes cast with respect to each such matter were as follows:
Matter: Approval of the issuance to Josephine Chaus of warrants to
purchase Common Stock of the Company in consideration for
her provision of credit support to the Company.
Affirmative Votes Negative Votes Abstain
----------------- -------------- -------
13,998,299 953,166 32,870
Matter: Approval of the sale by the Company to Josephine Chaus of
1,914,500 shares of Common Stock.
Affirmative Votes Negative Votes Abstain
- - ----------------- -------------- -------
14,728,025 209,641 46,669
Matter: Approval of the Bonus Plan for the Company's new Chief
Executive Officer, Andrew Grossman.
11
BERNARD CHAUS, INC. and SUBSIDIARIES
Affirmative Votes Negative Votes Abstain
- - ----------------- -------------- -------
17,136,925 276,202 41,545
Matter: Approval of the Option Plan for Andrew Grossman.
Affirmative Votes Negative Votes Abstain
- - ----------------- -------------- -------
14,601,789 348,246 34,300
Item 6. Exhibits and Reports on Form 8-K
(a) Attached hereto as Exhibits are the following:
<TABLE>
<CAPTION>
<C> <S>
10.109 Waiver dated February 10, 1995 to the Restated and
Amended Financing Agreement between the Company and
BNY Financial Corporation.
10.110 Agreement dated December 19, 1994, assigning the
subordinated notes from the Estate of Bernard Chaus
to Josephine Chaus.
10.111 Agreement dated January 11, 1995, between the Company
and Josephine Chaus extending the due dates on
subordinated promissory notes.
27 Financial Data Schedule
</TABLE>
(b) The Company filed no reports on Form 8-K during the quarter
ended December 31, 1994.
12
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
SIGNATURES
- - ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BERNARD CHAUS, INC.
(Registrant)
Date: February 10, 1995 By: /s/Josephine Chaus
----------------- ------------------
JOSEPHINE CHAUS
Chairwoman of the Board and
Office of the Chairman
Date: February 10, 1995 By: /s/Andrew Grossman
----------------- ------------------
ANDREW GROSSMAN
Chief Executive Officer and
Office of the Chairman
DATE: February 10, 1995 By: /s/Wayne S. Miller
----------------- ------------------
WAYNE S. MILLER
Executive Vice President
Finance & Administration and
Chief Financial Officer
(Principal Financial Officer)
13
<PAGE>
BNY FINANCIAL CORPORATION
A WHOLLY OWNED SUBSIDIARY OF THE BANK OF NEW YORK
NEW YORK'S FIRST BANK-FOUNDED 1734 BY ALEXANDER HAMILTON
1290 AVENUE OF THE AMERICAS NEW YORK, N.Y. 10104
212-408-7000
February 10, 1995
Bernard Chaus, Inc.
1410 Broadway
New York, NY 10018
Gentlemen:
We refer to our Restated and Amended Financing Agreement with you
bearing effective date of July 1, 1992, as amended ("Agreement"). Capitalized
terms herein have the meaning ascribed to them in the Agreement unless otherwise
indicated.
1. We waive any rights we would otherwise have as a result of the fact
that on December 31, 1994, Tangible Net Worth and Working Capital was less than
required by the covenants in the Agreement.
2. In consideration of the foregoing, you agree to pay us $25,000 on
execution hereof. In addition to our other rights, we may charge said
amount to your account.
The waivers herein are limited to the date and the provisions specified
above. We reserve all of our other rights, including but not limited to our
rights arising out of your failure to comply with other provisions, or your
failure to comply with the provisions specified above on a date other than that
specified above. Accordingly, nothing herein is, or should be construed to be,
a precedent.
Subject to the foregoing the Agreement is ratified and confirmed.
Very truly yours,
BNY FINANCIAL CORPORATION
/s/ Andrew Rogow
Title: Vice President
AGREED:
BERNARD CHAUS, INC.
/S/ Marc A. Zuckerman
Title: Treasurer & Assistant Secretary
<PAGE>
BERNARD CHAUS, INC. AND SUBSIDIARIES
INSTRUMENT OF ASSIGNMENT
THIS INSTRUMENT OF ASSIGNMENT, made, executed and delivered as of the
19 th day of December, 1994 by Daniel Rosenbloom and Josephine Chaus, as
co-executors (the "Executors") of the estate of Bernard Chaus, deceased, to
Josephine Chaus ("Chaus") as heir of Bernard Chaus, deceased.
W I T N E S S E T H
WHEREAS, in order to carry out the intent and purpose of the Last Will
and Testament of Bernard Chaus, the Executors wish to transfer and assign to
Chaus all right, title and interest in and to the subordinated notes of Bernard
Chaus, Inc. previously issued to Bernard Chaus, deceased, and listed on Schedule
A to this Instrument of Assignment (the "Notes"), copies of which are annexed
hereto;
NOW, THEREFORE, the Executors hereby convey, grant, bargain, sell,
transfer, set over, assign, alienate release, deliver and confirm unto Chaus and
her successors and assigns forever, without recourse, representation or
warranty, all right, title and interest of Bernard Chaus, deceased, in, to and
under the Notes, to have and to hold for her and their own use and benefit
forever.
This Instrument of Assignment is executed by, and shall be binding
upon, the Executors and their respective successors and assigns, for the uses
and purposes above set forth and referred to, effective immediately upon its
delivery to Chaus, and shall be governed by the laws of the State of New York,
without regard to conflicts of law principles thereof.
IN WITNESS WHEREOF, the Executors have caused this Instrument of
Assignment to be duly executed and delivered as of the date and year first above
written.
/S/
Daniel Rosenbloom, as co-Executor
of the estate of Bernard Chaus
/S/
Josephine Chaus, as co-Executor
of the estate of Bernard Chaus
Acknowledged
BERNARD CHAUS, INC.
By: /S/
Josephine Chaus
Chairwoman
<PAGE>
SCHEDULE A
SUBORDINATED NOTES ISSUED BY BERNARD CHAUS, INC.
$7,365,000 Subordinated Note dated June 30, 1986, as amended by letters dated
June 15, 1988, May 17, 1990, February 21, 1991, July 31, 1991, October 30, 1992,
September 9, 1993, October 18, 1993 and December 31, 1993
$1,000,000 Subordinated Note dated August 1, 1993, as amended by letters dated
October 18, 1993 and December 31, 1993
$311,500 Subordinated Note dated August 1, 1993, and amended by letters dated
October 18, 1993 and December 31, 1993
$181,056 Subordinated Note dated December 31, 1993
$412,950 Subordinated Note dated December 31, 1993
<PAGE>
JOSEPHINE CHAUS
January 11, 1995
Board of Directors
Bernard Chaus, Inc.
1410 Broadway
New York, New York 10018
RE: EXTENSION OF DUE DATE ON SUBORDINATED NOTES
OF BERNARD CHAUS, INC. (THE "COMPANY")
Gentlemen:
Reference is made to the Subordinated Notes payable to me by the
Company which are set forth on Schedule A (the "Notes"), each of which become
due and payable on October 1, 1995. In view of the covenants under the Company's
credit facility with BNY Financial Corp. which continue to prohibit payments of
interest or principal under the Notes, I have agreed to extend the maturity date
of the Notes for 90 days. This letter shall constitute an amendment to each of
the Notes to extend the due date thereof until January 1, 1996. Except as
expressly modified herein, all of the provisions, terms and conditions contained
in the Notes, as they may have been previously amended, shall remain in full
force and effect.
Very truly yours,
/S/ Josephine Chaus
Josephine Chaus
Accepted and agreed to:
Bernard Chaus, Inc.
By: /S/ Wayne S. Miller
Date:
<PAGE>
SCHEDULE A
SUBORDINATED NOTES
Payor: Bernard Chaus, Inc.
Payee: Josephine Chaus
PRINCIPAL AMOUNT DATE
---------------- ----
$7,365,000 6/30/86 as amended by letters dated
6/15/88, 5/17/90, 2/21/91, 7/31/91, 10/30/92,
9/9/93, 10/18/93 and 12/31/93
$ 208,716 8/1/93 as amended by letter dated 10/18/93
$1,311,500 8/1/93 as amended by letters dated 10/18/93
and 12/31/93
$ 181,056 12/31/93
$ 412,950 12/31/93
$7,365,000 6/30/86 as amended by letters dated
6/15/88, 5/17/90, 2/21/91, 7/31/91, 10/30/92,
9/9/93, 10/18/93 and 12/31/93
$ 208,716 8/1/93 as amended by letter dated 10/18/93
$1,000,000 8/1/93 as amended by letters dated 10/18/93
and 12/31/93
$ 311,500 8/1/93 as amended by letters dated 10/18/93
and 12/31/93
$ 181,056 12/31/93
$ 412,950 12/31/93
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
<PERIOD-TYPE> 3-MOS
<CASH> 847
<SECURITIES> 0
<RECEIVABLES> 9,747
<ALLOWANCES> 0
<INVENTORY> 14,983
<CURRENT-ASSETS> 26,990
<PP&E> 3,205
<DEPRECIATION> 0
<TOTAL-ASSETS> 30,732
<CURRENT-LIABILITIES> 28,846
<BONDS> 0
0
0
<COMMON> 209
<OTHER-SE> (20,152)
<TOTAL-LIABILITY-AND-EQUITY> 30,732
<SALES> 111,938
<TOTAL-REVENUES> 111,938
<CGS> 90,943
<TOTAL-COSTS> 90,943
<OTHER-EXPENSES> 32,180
<LOSS-PROVISION> 165
<INTEREST-EXPENSE> 2,528
<INCOME-PRETAX> (13,705)
<INCOME-TAX> 151
<INCOME-CONTINUING> (13,856)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,856)
<EPS-PRIMARY> (.71)
<EPS-DILUTED> (.71)
</TABLE>
