**UNITED
      STATES 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 September 30, 2006**





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: 001-32568


__________________





**MAIDENFORM
      BRANDS, INC.**


(Exact
      name of registrant as specified in its charter)




**Delaware**
            **06-1724014**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)**154
                Avenue E, Bayonne, NJ**
            **07002**(Address
                of principal executive offices)
            (Zip
                Code)




**(201)
      436-9200**


(Registrant’s
      telephone number, including area code)


__________________





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 o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.




Large accelerated filer o
            Accelerated filer o
            Non-accelerated filer x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No x





As
      of
      November 3, 2006, there were 22,845,817 shares of the registrant’s common stock,
      par value $0.01 per share, outstanding.







**INDEX**








**PART
                I - FINANCIAL INFORMATION**
            **PAGE**Item
                1. Financial Statements (Unaudited)Condensed
                Consolidated Balance Sheets at September 30, 2006 and December 31,
                2005
            2Condensed
                Consolidated Statements of Income for the three and nine months ended
                September 30, 2006 and October 1, 2005
            3Condensed
                Consolidated Statements of Cash Flows for the nine months ended September
                30, 2006 and October 1, 2005
            4Notes
                to the Condensed Consolidated Financial Statements
            5Item
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations
            14Item
                3. Quantitative and Qualitative Disclosure About Market
                Risk
            24Item
                4. Controls and Procedures
            25**PART
                II - OTHER INFORMATION**Item1.
                Legal Proceedings
            26Item1A.
                Risk Factors
            26Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            26Item
                3. Defaults Upon Senior Securities
            27Item
                4. Submission of Matters to a Vote of Security Holders
            27Item
                5. Other Information
            27Item
                6. Exhibits
            27








1




**PART
      I - FINANCIAL INFORMATION**





**Item
      1. Financial Statements (Unaudited)**




**MAIDENFORM
                    BRANDS, INC. AND SUBSIDIARIES****CONDENSED
                    CONSOLIDATED BALANCE SHEETS*****(in
                    thousands, except share and per share
                    amounts)******(unaudited)***
  **September
                    30,**
                  **2006**
                
                **December
                    31,**
                  **2005****Assets**Current
                    assetsCash
                    and cash equivalents
                
                $
                16,491
                
                $
                30,978Accounts
                    receivable, net
                
                
                56,808
                
                
                34,169Inventories
                
                
                50,133
                
                
                35,255Deferred
                    income taxes
                
                
                8,734
                
                
                8,724Prepaid
                    expenses and other current assets
                
                
                6,643
                
                
                8,059Total
                    current assets
                
                
                138,809
                
                
                117,185Property,
                    plant and equipment, net
                
                
                17,792
                
                
                18,230Goodwill
                
                
                7,884
                
                
                7,884Intangible
                    assets, net
                
                
                99,967
                
                
                100,838Other
                    non-current assets
                
                
                2,719
                
                
                3,211Total
                    assets
                
                $
                267,171
                
                $
                247,348**Liabilities
                    and stockholders’ equity**Current
                    liabilitiesAccounts
                    payable
                
                $
                26,509
                
                $
                19,212Accrued
                    expenses and other current liabilities
                
                
                27,726
                
                
                18,253Total
                    current liabilities
                
                
                54,235
                
                
                37,465Long-term
                    debt
                
                
                120,000
                
                
                137,500Deferred
                    income taxes
                
                
                14,651
                
                
                10,754Other
                    non-current liabilities
                
                
                6,987
                
                
                8,926Total
                    liabilities
                
                
                195,873
                
                
                194,645Stockholders’
                    equityPreferred
                    stock - $0.01 par value; 10,000,000 shares authorizedand
                    none issued and outstanding
                
                
                -
                
                
                -Common
                    stock - $0.01 par value; 100,000,000 shares authorized;23,488,357
                    shares issued and 22,841,874 outstanding at September 30,
                    2006and
                    23,488,357 issued and outstanding at December 31, 2005
                
                
                235
                
                
                235Additional
                    paid-in capital
                
                
                60,544
                
                
                59,063Retained
                    earnings (accumulated deficit)
                
                
                17,730
                
                
                (6,809
                )Accumulated
                    other comprehensive income
                
                
                102
                
                
                214Treasury
                    stock (646,483 shares at an average price per share of
                    $11.31)
                
                
                (7,313
                )
                
                -Total
                    stockholders’ equity
                
                
                71,298
                
                
                52,703Total
                    liabilities and stockholders’ equity
                
                $
                267,171
                
                $
                247,348
  The
          accompanying notes are an integral part of these condensed consolidated
          financial statements.
  2
  **MAIDENFORM
                    BRANDS, INC. AND SUBSIDIARIES****CONDENSED
                    CONSOLIDATED STATEMENTS OF INCOME*****(in
                    thousands, except share and per share
                    amounts)******(unaudited)***
  **Three
                    months ended**
                
                **Nine
                    months ended****September
                    30,**
                  **2006**
                
                **October
                    1,**
                  **2005**
                
                **September
                    30,**
                  **2006**
                
                **October
                    1,**
                  **2005**Net
                    sales
                
                $
                113,833
                
                $
                100,121
                
                $
                331,816
                
                $
                302,622Cost
                    of sales
                
                
                71,079
                
                
                63,458
                
                
                206,867
                
                
                193,631Gross
                    profit
                
                
                42,754
                
                
                36,663
                
                
                124,949
                
                
                108,991Selling,
                    general andadministrative
                    expenses
                
                
                25,676
                
                
                28,703
                
                
                77,119
                
                
                76,874Operating
                    income
                
                
                17,078
                
                
                7,960
                
                
                47,830
                
                
                32,117Interest
                    expense, net
                
                
                2,177
                
                
                2,582
                
                
                6,446
                
                
                13,486Income
                    before provisionfor
                    income taxes
                
                
                14,901
                
                
                5,378
                
                
                41,384
                
                
                18,631Income
                    tax expense
                
                
                6,027
                
                
                3,263
                
                
                16,845
                
                
                9,482Net
                    income
                
                
                8,874
                
                
                2,115
                
                
                24,539
                
                
                9,149Preferred
                    stock dividends and changesin
                    redemption value
                
                
                -
                
                
                (1,714
                )
                
                -
                
                
                (17,264
                )Net
                    income (loss) available tocommon
                    stockholders
                
                $
                8,874
                
                $
                401
                
                $
                24,539
                
                $
                (8,115
                )Basic
                    earnings (loss) per common share
                
                $
                0.39
                
                $
                0.02
                
                $
                1.06
                
                $
                (0.39
                )Diluted
                    earnings (loss) per common share
                
                $
                0.37
                
                $
                0.02
                
                $
                1.01
                
                $
                (0.39
                )Basic
                    weighted average number ofshares
                    outstanding
                
                
                22,884,957
                
                
                22,718,260
                
                
                23,066,698
                
                
                20,772,753Diluted
                    weighted average number ofshares
                    outstanding
                
                
                24,101,601
                
                
                23,902,295
                
                
                24,217,570
                
                
                20,772,753
  The
          accompanying notes are an integral part of these
          condensed consolidated financial statements.
  3
  **MAIDENFORM
                    BRANDS, INC. AND SUBSIDIARIES****CONDENSED
                    CONSOLIDATED STATEMENTS OF CASH FLOWS*****(in
                    thousands)******(unaudited)***
  **Nine
                    months ended****September
                    30,**
                  **2006**
                
                **October
                    1,**
                  **2005****Cash
                    flows from operating activities**Net
                    income
                
                $
                24,539
                
                $
                9,149Adjustments
                    to reconcile net income to net cashfrom
                    operating activitiesDepreciation
                    and amortization
                
                
                2,106
                
                
                4,927Amortization
                    of intangible assets
                
                
                871
                
                
                870Amortization
                    of deferred financing costs
                
                
                671
                
                
                5,759Stock-based
                    compensation
                
                
                1,536
                
                
                1,095Deferred
                    income taxes
                
                
                3,887
                
                
                2,589Tax
                    benefit from exercise of stock options
                
                
                -
                
                
                2,774Other
                    non-cash items
                
                
                -
                
                
                835Net
                    changes in operating assets and liabilitiesAccounts
                    receivable
                
                
                (22,639
                )
                
                (27,546
                )Inventories
                
                
                (14,878
                )
                
                (3,794
                )Prepaid
                    expenses and other current andnon-current
                    assets
                
                
                1,530
                
                
                (4,564
                )Accounts
                    payable
                
                
                7,297
                
                
                6,702Accrued
                    expenses and other current andnon-current
                    liabilities
                
                
                2,411
                
                
                (4,359
                )Income
                    taxes payable
                
                
                5,116
                
                
                5,871Net
                    cash from operating activities
                
                
                12,447
                
                
                308**Cash
                    flows from investing activities**Capital
                    expenditures
                
                
                (1,668
                )
                
                (1,353
                )Proceeds
                    from sale of assets
                
                
                -
                
                
                1,455Net
                    cash from investing activities
                
                
                (1,668
                )
                
                102**Cash
                    flows from financing activities**Term
                    loan facility repayments
                
                
                (17,500
                )
                
                (68,787
                )Purchase
                    of common stock for treasury
                
                
                (7,563
                )
                
                -Stock
                    options exercised
                
                
                195
                
                
                -Deferred
                    financing costs
                
                
                (300
                )
                
                (2,428
                )Term
                    loan facility borrowings
                
                
                -
                
                
                61,037Stock
                    options purchased
                
                
                -
                
                
                (140
                )Special
                    cash dividends paid to preferred stockholders
                
                
                -
                
                
                (13,320
                )Short-term
                    debt, net
                
                
                -
                
                
                111Borrowings
                    under revolving facility
                
                
                -
                
                
                10,000Repayments
                    under revolving facility
                
                
                -
                
                
                (10,000
                )Proceeds
                    from issuance of preferred and common stock
                
                
                -
                
                
                52,579Redemption
                    of preferred stock and preferred options andpayment
                    of accumulated dividends
                
                
                -
                
                
                (46,828
                )Net
                    cash from financing activities
                
                
                (25,168
                )
                
                (17,776
                )Effects
                    of exchange rate changes on cash
                
                
                (98
                )
                
                (15
                )Net
                    decrease in cash
                
                
                (14,487
                )
                
                (17,381
                )**Cash
                    and cash equivalents**Beginning
                    of period
                
                
                30,978
                
                
                23,212End
                    of period
                
                $
                16,491
                
                $
                5,831**Supplementary
                    disclosure of cash flow information**Cash
                    paid during the periodInterest
                
                $
                7,082
                
                $
                7,080Income
                    taxes
                
                $
                7,418
                
                $
                1,565
  The
          accompanying notes are an integral part of these
          condensed consolidated financial statements.
  4
  **MAIDENFORM
          BRANDS, INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


***(in
      thousands, except share and per share amounts)***


***(unaudited)***





**1.**  **SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES**





*Basis
      of Presentation*


Maidenform
      Brands, Inc. and its subsidiaries (the “Company,”  “we,”  “us” or
“our”) design, source and market an extensive range of intimate apparel
      products, including bras, panties and shapewear. We sell through multiple
      distribution channels including department stores and national chain stores,
      mass merchants (including warehouse clubs), and other (including specialty
      retailers, off-price retailers and licensing income). In addition, we also
      operated 77 retail outlet stores as of September 30, 2006 and October 1, 2005
      and sell products on our websites.





In
      our
      opinion, the accompanying unaudited condensed consolidated financial statements
      contain all adjustments necessary to state fairly our financial position at
      September 30, 2006, the results of our operations for the three and nine months
      ended September 30, 2006 and October 1, 2005, and cash flows for the nine months
      ended September 30, 2006 and October 1, 2005. These adjustments consist of
      normal recurring adjustments. Operating results for the three and nine-month
      periods ended September 30, 2006 are not necessarily indicative of the results
      that may be expected for any other future interim period or for a full fiscal
      year. The condensed consolidated balance sheet at December 31, 2005 has been
      derived from our audited consolidated financial statements at that date, but
      does not include all disclosures required by accounting principles generally
      accepted in the United States of America.





These
      condensed consolidated financial statements have been prepared in accordance
      with Article 10 of Regulation S-X promulgated by the Securities and Exchange
      Commission. Accordingly, certain information and disclosures normally included
      in financial statements prepared in accordance with accounting principles
      generally accepted in the United States of America have been condensed or
      omitted pursuant to the rules and regulations of the Securities and Exchange
      Commission. The financial statements included herein should be read in
      conjunction with our Annual Report on Form 10-K for the year ended December
      31,
      2005.





*Stock-Based
      Compensation*


Effective
      January 1, 2006, we adopted Statement of Financial Accounting Standards (SFAS)
      No. 123R, “Share-Based Payments,” (SFAS No. 123R) which revises SFAS No.
      123, “Accounting for Stock-Based Compensation.” Prior to January 1, 2006, we
      accounted for stock-based compensation under SFAS No. 123. The adoption of
      SFAS
      No. 123R did not have a material impact on our stock-based compensation expense
      for the three and nine-month periods ended September 30, 2006. Further, we
      believe the adoption of SFAS No. 123R will not have a material impact on our
      future stock-based compensation expense.




Under
      SFAS No. 123R, we are required to select a valuation technique or option-pricing
      model that meets the criteria as stated in the standard, which includes a
      binomial model and the Black-Scholes model. At the present time, we will
      continue to use the Black-Scholes model, which requires the input of subjective
      assumptions. These assumptions include estimating the length of time employees
      will retain their vested stock options before exercising them (“expected term”),
      the estimated volatility of our common stock price over the expected term and
      the number of options that will ultimately be forfeited (“forfeitures”). Changes
      in the subjective assumptions can materially affect the estimate of fair value
      of stock-based compensation and consequently, the related amount recognized
      in
      the consolidated statements of income.





SFAS
      No.
      123R requires us to estimate forfeitures in calculating the expense relating
      to
      stock-based compensation as opposed to only recognizing these forfeitures and
      the corresponding reduction in expense as they occur. In addition, SFAS No.
      123R
      requires us to reflect the tax savings resulting from tax deductions in excess
      of expense as a financing cash flow in our statement of cash flows rather than
      as an operating cash flow as presented in prior periods.




On
      November 10, 2005, the Financial Accounting Standards Board (FASB) issued FASB
      Staff Position No. FAS 123R-3, “Transition Election Related to Accounting for
      Tax Effects of Share-Based Payment Awards.” The Company has elected to adopt the
      alternative transition method provided in the FASB Staff Position for
      calculating the tax effects of stock-based compensation pursuant to SFAS No.
      123R. The alternative transition method includes simplified methods to establish
      the beginning balance of the additional paid-in capital pool (“APIC pool”)
      related to the tax effects of employee stock-based compensation and to determine
      the subsequent impact on the APIC pool and consolidated statements of cash
      flows
      of the tax effects of employee stock-based compensation awards that are
      outstanding upon adoption of SFAS No. 123R.




5





**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**


***(in
      thousands, except share and per share amounts)***


***(unaudited)***





**2.**  **DEBT**


**September
                  30, 2006**
              
              **December
                  31, 2005****Long-term
                  debt**Term
                  loan facility
              
              $
              120,000
              
              $
              137,500


At
      September 30, 2006, we had $120,000 outstanding under our term loan, $0
      outstanding under our revolving facility with $47,718 available for borrowings
      under the revolving facility, after giving effect to $2,282 of outstanding
      letters of credit. We use the letters of credit as collateral for our workers’
compensation insurance programs and bonds issued on our behalf to secure our
      obligation to pay customs duties. We were in compliance with all debt covenants
      at September 30, 2006.




Payments
      due on long-term debt during each of the five years subsequent to September
      30,
      2006, are as follows:




Balance
                  of fiscal 2006
              
              $
              -In
                  fiscal 2007
              
              
              -In
                  fiscal 2008
              
              
              -In
                  fiscal 2009
              
              
              19,875In
                  fiscal 2010
              
              
              100,125


On
      October 31, 2006, we made an additional payment of $5,000 which is not reflected
      in the above table .





**3.**  **BENEFIT
      PLANS AND POSTRETIREMENT PLANS**




We
      sponsor a defined benefit pension plan covering substantially all eligible
      employees not covered by the union plans. We also maintain postretirement
      medical benefit plans for certain eligible retirees for which postretirement
      benefit expense on a quarterly basis is insignificant.





The
      components of pension benefit expense charged to operations are as
      follows:




**Three
                  months ended**
              
              **Nine
                  months ended****September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005**
              
              **September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005**Service
                  cost
              
              $
              481
              
              $
              429
              
              $
              1,443
              
              $
              1,286Interest
                  cost
              
              
              348
              
              
              308
              
              
              1,042
              
              
              925Expected
                  return on plan assets
              
              
              (318
              )
              
              (274
              )
              
              (950
              )
              
              (821
              )Recognized
                  net actuarial loss
              
              
              34
              
              
              8
              
              
              100
              
              
              23Net
                  periodic benefit cost
              
              $
              545
              
              $
              471
              
              $
              1,635
              
              $
              1,413
 
 6




**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**


***(in
      thousands, except share and per share amounts)***


***(unaudited)***





**4.**  **STOCKHOLDERS’
      EQUITY**




**Retained**
              
              
              **Accumulated****Common**
              
              **Treasury**
              
              
              **Additional**
              
              
              **earnings**
              
              
              **other**
              
              
              **Total****stock**
              
              **stock**
              
              
              **paid-in**
              
              
              **(accumulated**
              
              
              **comprehensive**
              
              
              **stockholders'****Shares**
              
              **$**
              ****
              **Shares**
              ****
              ****
              **$**
              ****
              ****
              **capital**
              
              
              **deficit)**
              
              
              **income**
              
              
              **equity****Balance
                  at December 31, 2005**
              
              
              23,488,357
              
              $
              235
              
              
              -
              
              
              $
              -
              
              
              $
              59,063
              
              
              $
              (6,809
              )
              
              $
              214
              
              
              $
              52,703Stock
                  compensation
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,536
              
              
              
              
              
              
              
              
              
              
              
              1,536Purchase
                  of common stockfor
                  treasury
              
              
              
              
              
              
              
              
              (669,500
              )
              
              
              (7,563
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (7,563
              )Stock
                  options exercised
              
              
              
              
              
              
              
              
              23,017
              
              
              
              250
              
              
              
              (55
              )
              
              
              
              
              
              
              
              
              
              
              195**Comprehensive
                  income**Net
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              24,539
              
              
              
              
              
              
              
              24,539Changes
                  during the period
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (112
              )
              
              
              (112
              )Total
                  comprehensive income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              24,427**Balance
                  at September 30, 2006**
              
              
              23,488,357
              
              $
              235
              
              
              (646,483
              )
              
              $
              (7,313
              )
              
              $
              60,544
              
              
              $
              17,730
              
              
              $
              102
              
              
              $
              71,298


**5.**  **STOCK
      REPURCHASE PROGRAM**





In
      February 2006, the Board of Directors approved a $20,000 stock repurchase
      program, authorizing the repurchase of our common stock. We are authorized
      to
      make repurchases from time-to-time in the open market pursuant to existing
      rules and regulations and other parameters approved by the Board of
      Directors. During the nine months ended September 30, 2006, we repurchased
      669,500 shares of our common stock at a total cost of $7,563, at an average
      price per share of $11.30.





**6.**  **STOCK-BASED
      COMPENSATION**




In
      July
      2005, the Board of Directors adopted the Maidenform Brands, Inc. 2005 Stock
      Incentive Plan pursuant to which the Company can grant to employees, consultants
      and non-employee
      directors equity-based awards. Under this plan, 1,750,000 shares were set aside
      and reserved
      for issuance. The plan provides for a variety of vesting dates with the majority
      of the options vesting in annual increments of 25% of the number of options
      granted over the first four years of the grant. Options granted under the plan
      expire no later than ten years after date of grant.




The
      Board
      of Directors also amended the Maidenform Brands, Inc. 2004 Rollover Stock Option
      Plan, the Maidenform Brands, Inc. 2004 Stock Option Plan and the Maidenform
      Brands, Inc. 2004 Stock Option Plan for Non-Employees Directors to provide
      that
      no additional equity-based awards shall be available for issuance under these
      plans, although previously granted stock options will continue to remain
      outstanding in accordance with the terms of the applicable option agreement
      and
      the applicable plan.




The
      fair
      value of the stock options on the grant dates were $230 and $4,599, for stock
      options granted during the nine-month period ended September 30, 2006 and
      October 1, 2005, respectively. These amounts are being expensed over the vesting
      periods. We recorded stock compensation expense, which represents the
      amortization of the fair value of the stock options issued, of approximately
      $491 and $1,536 for the three and nine months ended September 30, 2006,
      respectively, and $489 and $1,095 for the three and nine months ended October
      1,
      2005, respectively.




The
      weighted average fair value of stock options granted during the nine months
      ended September 30, 2006 was $4.46. The fair value was estimated using the
      Black-Scholes option-pricing model based on the weighted average market price
      at
      grant date of $11.42 for the nine months ended September 30, 2006.




7




**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**


***(in
      thousands, except share and per share amounts)***


***(unaudited)***







The
      weighted average fair value of stock options granted during the nine months
      ended October 1, 2005 was $7.69. The fair value was estimated using the
      Black-Scholes option-pricing model based on the weighted average market price
      at
      grant date of $16.63 for the nine months ended October 1, 2005. The weighted
      average fair value of stock options granted during the full year 2005 was $7.67
      and the fair value was estimated using the Black-Scholes option-pricing model
      based on the weighted average market price at grant date of $16.53 for the
      full
      year 2005.





At
      September 30, 2006, there was approximately $4,285 of unrecognized compensation
      costs, adjusted for estimated forfeitures, related to non-vested stock options.
      Total unrecognized compensation cost will be adjusted for future changes in
      estimated forfeitures. This amount is expected to be recognized over a weighted
      average period of 2.4 years and does not include the impact of any future
      stock-based compensation awards.





At
      September 30, 2006, the aggregate intrinsic value of options outstanding and
      options exercisable was $25,569 and $15,559, respectively. The aggregate
      intrinsic value of options exercised during the three and nine months ended
      September 30, 2006 was $248 and $290, respectively. (The intrinsic value of
      a
      stock option is the amount by which the market value of the underlying stock
      exceeds the exercise price of the option.)





The
      fair
      value for each stock option granted during the nine months ended September
      30,
      2006 and October 1, 2005 was estimated at the date of grant using a
      Black-Scholes option-pricing model, assuming the following assumptions.




**Nine
                    months ended****September
                    30,**
                  **2006**
                
                **October
                    1,**
                  **2005**Dividend
                    yield
                
                
                0.00
                %
                
                0.00
                %Risk-free
                    interest rate
                
                
                4.89%
                    - 4.95
                %
                
                4.00%
                    - 4.11
                %Expected
                    life (years)
                
                
                4
                    - 5
                
                
                5
                    - 10Volatility
                
                
                39.40
                %
                
                0.00%
                    - 39.40
                %





Changes
      in options outstanding are summarized as follows:




**Nine
                  months ended****September
                  30, 2006****Weighted****average****Number**
              
              **exercise****of
                  options**
              
              **price**Options
                  outstanding,beginning
                  of year
              
              
              3,037,871
              
              $
              4.77Options
                  granted
              
              
              51,574
              
              
              11.42Options
                  exercised
              
              
              (23,017
              )
              
              3.56Options
                  cancelled or forfeited
              
              
              (131,920
              )
              
              9.13Options
                  outstanding, at September 30, 2006
              
              
              2,934,508
              
              $
              4.71Options
                  exercisable, at September 30, 2006
              
              
              1,547,557
              
              $
              3.03
 
 8




**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**


***(in
      thousands, except share and per share amounts)***


***(unaudited)***





The
      following table summarizes stock options outstanding and exercisable at
      September 30, 2006:




**Options
                  outstanding**
              
              **Options
                  exercisable****Weighted**
              
              **Weighted**
              
              
              
              **Weighted**
              
              **Weighted****average**
              
              **average**
              
              
              
              **average**
              
              **average****Options**
              
              **remaining**
              
              **exercise**
              
              **Number**
              
              **remaining**
              
              **exercise****Range
                  of exercise prices**
              
              **outstanding**
              
              **contract
                  life**
              
              **price**
              
              **exercisable**
              
              **contract
                  life**
              
              **price**$1.82
              
              
              1,012,160
              
              
              7.7
                  years
              
              $
              1.82
              
              
              512,934
              
              
              7.7
                  years
              
              $
              1.823.64
              
              
              991,198
              
              
              7.7
                  years
              
              
              3.64
              
              
              502,453
              
              
              7.7
                  years
              
              
              3.6411.11
                  - 17.00
              
              
              511,449
              
              
              5.9
                  years
              
              
              16.32
              
              
              112,469
              
              
              5.8
                  years
              
              
              16.980.01
              
              
              317,529
              
              
              6.0
                  years
              
              
              0.01
              
              
              317,529
              
              
              6.0
                  years
              
              
              0.010.06
              
              
              102,172
              
              
              5.3
                  years
              
              
              0.06
              
              
              102,172
              
              
              5.3
                  years
              
              
              0.062,934,508
              
              
              
              
              
              
              
              
              1,547,557
 **7** **.**  **COMPREHENSIVE
        INCOME**




The
      changes in comprehensive income are as follows:




**Nine
                  months ended****September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005**Net
                  income
              
              $
              24,539
              
              $
              9,149Foreign
                  currency translation adjustments (a)
              
              
              (98
              )
              
              (15
              )Interest
                  rate swaps, (net of tax)
              
              
              (14
              )
              
              446Comprehensive
                  income
              
              $
              24,427
              
              $
              9,580




(a)
            No
                tax benefit has been provided associated with the foreign currency
                translation adjustment due to management’s intention to permanently
                reinvest the earnings of our foreign
                subsidiaries.





**8.**  **INCOME
      TAXES**




We
      review
      our annual effective tax rate on a quarterly basis and we make necessary changes
      if information or events warrant such changes. The annual effective tax rate
      is
      forecasted quarterly using actual historical information and forward-looking
      estimates. The estimated annual effective tax rate may fluctuate due to changes
      in forecasted annual operating income; changes to the valuation allowance for
      deferred tax assets; changes to actual or forecasted permanent book to tax
      differences (non-deductible expenses); impacts from future tax settlements
      with
      state, federal or foreign tax authorities; or impacts from tax law changes.
      Our
      effective income tax rate for the three and nine months ended September 30,
      2006
      was 40.4% and 40.7%, respectively, as compared to an effective income tax rate
      for the three and nine months ended October 1, 2005 of 60.7% and 50.9%,
      respectively. The effective income tax rate for the three and nine months ended
      October 1, 2005 was higher than the normal statutory income tax rate, due to
      the
      tax effect of non-deductible expenses associated with our initial public
      offering in July 2005.




9




**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**


***(in
      thousands, except share and per share amounts)***


***(unaudited)***





**9.**  **SEGMENT
      INFORMATION**




We
      report
      segment information in accordance with the provisions of SFAS No. 131,
‘‘Disclosures about Segments of an Enterprise and Related Information,’’ which
      requires segment information to be disclosed based on a ‘‘management approach.’’
The management approach refers to the internal reporting that we use for making
      operating decisions and assessing the performance of reportable segments. SFAS
      No. 131 also requires disclosure about products and services, geographic areas
      and major customers. For purposes of complying with SFAS No. 131, we identified
      our two reportable segments as ‘‘Wholesale’’ and ‘‘Retail.’’ Our wholesale sales
      are to department stores, national chain stores, mass merchants (including
      warehouse clubs), specialty retailers, off-price retailers, and third party
      distributors servicing similar customers in foreign countries while our retail
      segment reflects our operations from our retail stores and internet operations.
      Royalty income is also included in our wholesale segment. Within our reportable
      segments, wholesale includes corporate-related assets. Each segment’s results
      include the costs directly related to the segment’s net sales and all other
      costs allocated based on the relationship to consolidated net sales or units
      produced to support each segment’s net sales. Intersegment sales and transfers
      are recorded at cost and treated as a transfer of inventory.




10




**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**


***(in
      thousands, except share and per share amounts)***


***(unaudited)***





Information
      on segments and reconciliation to income before provision for income taxes,
      are
      as follows:




**Three
                  months ended**
              
              **Nine
                  months ended****September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005**
              
              **September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005**Net
                  salesWholesale
              
              $
              96,457
              
              $
              83,614
              
              $
              289,479
              
              $
              261,363Retail
              
              
              17,376
              
              
              16,507
              
              
              42,337
              
              
              41,259Total
              
              $
              113,833
              
              $
              100,121
              
              $
              331,816
              
              $
              302,622Operating
                  incomeWholesale
              
              $
              14,546
              
              $
              5,996
              
              $
              44,312
              
              $
              30,755Retail
              
              
              2,532
              
              
              1,964
              
              
              3,518
              
              
              1,362Operating
                  income
              
              
              17,078
              
              
              7,960
              
              
              47,830
              
              
              32,117Interest
                  expense, net
              
              
              2,177
              
              
              2,582
              
              
              6,446
              
              
              13,486Income
                  before provisionfor
                  income taxes
              
              $
              14,901
              
              $
              5,378
              
              $
              41,384
              
              $
              18,631Depreciation
                  and amortizationWholesale
              
              $
              625
              
              $
              575
              
              $
              1,854
              
              $
              4,639Retail
              
              
              377
              
              
              389
              
              
              1,123
              
              
              1,158Total
              
              $
              1,002
              
              $
              964
              
              $
              2,977
              
              $
              5,797Net
                  sales by geographic areaUnited
                  States
              
              $
              105,997
              
              $
              91,921
              
              $
              309,767
              
              $
              281,682International
              
              
              7,836
              
              
              8,200
              
              
              22,049
              
              
              20,940Total
              
              $
              113,833
              
              $
              100,121
              
              $
              331,816
              
              $
              302,622Intercompany
                  sales from wholesaleto
                  retail
              
              $
              4,336
              
              $
              3,435
              
              $
              10,956
              
              $
              10,121**September
                  30,**
                **2006**
              
              
              **December
                  31,**
                **2005**Identifiable
                  assetsWholesale
              
              $
              241,336
              
              $
              221,597Retail
              
              
              25,835
              
              
              25,751Total
              
              $
              267,171
              
              $
              247,348


At
      September 30, 2006 and December 31, 2005, our five largest uncollaterized
      receivables represented approximately 62% and 53% of total accounts receivable,
      respectively. For both the three and nine-month periods ended September 30,
      2006, two customers in the wholesale segment each accounted for more than 10%
      of
      our consolidated net sales as compared to one customer in the wholesale segment
      for the three and nine-month periods ended October 1, 2005.




11




**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**


***(in
      thousands, except share and per share amounts)***


***(unaudited)***





**10.**  **EARNINGS
      PER SHARE**




The
      following is a reconciliation of basic number of common shares outstanding
      to
      diluted common and common equivalent shares outstanding:




**Three
                  months ended**
              
              **Nine
                  months ended****September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005**
              
              **September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005**Net
                  income
              
              $
              8,874
              
              $
              2,115
              
              $
              24,539
              
              $
              9,149Less:
                  Preferred stock dividends andchanges
                  in redemption value
              
              
              -
              
              
              (1,714
              )
              
              -
              
              
              (17,264
              )Net
                  income (loss) available to commonstockholders
              
              $
              8,874
              
              $
              401
              
              $
              24,539
              
              $
              (8,115
              )Weighted
                  average number of common andcommon
                  equivalent shares outstanding:Basic
                  number of common sharesoutstanding
              
              
              22,884,957
              
              
              22,718,260
              
              
              23,066,698
              
              
              20,772,753Impact
                  of dilutive securities
              
              
              1,216,644
              
              
              1,184,035
              
              
              1,150,872
              
              
              -Dilutive
                  number of common and commonequivalent
                  shares outstanding
              
              
              24,101,601
              
              
              23,902,295
              
              
              24,217,570
              
              
              20,772,753Basic
                  earnings (loss) per common share
              
              $
              0.39
              
              $
              0.02
              
              $
              1.06
              
              $
              (0.39
              )Diluted
                  earnings (loss) per common share
              
              $
              0.37
              
              $
              0.02
              
              $
              1.01
              
              $
              (0.39
              )


Options
      to purchase approximately 447,000 and 478,000 shares of common stock outstanding
      during the three and nine months ended September 30, 2006, respectively, were
      not included in the computation of diluted earnings per share because the option
      exercise prices were greater than the average market price of the shares of
      common stock.





Options
      to purchase approximately 507,000 shares of common stock outstanding during
      the
      three months ended October 1, 2005, was not included in the computation of
      diluted earnings per share because the option exercise prices were greater
      than
      the average market price of the shares of common stock.





Options
      to purchase approximately 1,280,096 shares of common stock outstanding during
      the nine months ended October 1, 2005, were not included in the computation
      of
      diluted earnings per share because of their anti-dilutive effect.





**11.**  **COMMITMENTS
      AND CONTINGENCIES**




**Purchase
      commitments**




In
      the
      normal course of business, we enter into purchase commitments covering inventory
      requirements of finished goods. At September 30, 2006, we had purchase
      commitments of $77,441 and believe that we have adequate reserves for expected
      losses arising from all purchase commitments.




12




**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


**NOTES
      TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
      (Continued)**


***(in
      thousands, except share and per share amounts)***


***(unaudited)***





**Litigation**





We
      are
      party to various legal actions arising in the ordinary course of business.
      Based
      on information presently available to us, we believe that we have adequate
      legal
      defenses, reserves or insurance coverage for these actions and that the ultimate
      outcome of these actions will not have a material adverse effect on our
      consolidated statements of financial position, results of
      operations or cash flows.





**12.**  **ACCRUED
      EXPENSES AND OTHER CURRENT LIABILITIES**




**September
                  30,**
                **2006**
              
              **December
                  31,**
                **2005**Accrued
                  wages, incentive compensation and payroll taxes
              
              $
              8,719
              
              $
              6,724Accrued
                  trade promotions
              
              
              2,832
              
              
              2,277Federal,
                  state and local income taxes payable
              
              
              6,046
              
              
              930Accrued
                  other
              
              
              10,129
              
              
              8,322$
              27,726
              
              $
              18,253


**13.**  **RECENTLY
      ISSUED ACCOUNTING STANDARDS**





In
      July
      2006, the FASB issued FASB Interpretation No. 48 (FIN No. 48), “Accounting for
      Uncertainty in Income Taxes,” which clarifies the accounting for uncertainty in
      income taxes recognized in an enterprise’s financial statements in accordance
      with SFAS No. 109, “Accounting for Income Taxes.” This interpretation prescribes
      a recognition threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be taken
      in a
      tax return. This interpretation also provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure, and transition. FIN No. 48 is effective for fiscal years
      beginning after December 15, 2006 and requires certain disclosures in our fiscal
      year ending December 30, 2006 Form 10-K. The Company is currently
      evaluating the impact of adopting this interpretation.





In
      September 2006, the Securities and Exchange Commission (the “SEC”) issued Staff
      Accounting Bulletin No. 108 (“SAB 108”), “Considering the Effects of Prior
      Year Misstatements when Qualifying Misstatements in Current Year Financial
      Statements,” which provides interpretive guidance on the consideration of the
      effects of prior year misstatements in quantifying current year misstatements
      for the purpose of a materiality assessment. SAB 108 is effective for companies
      with fiscal years ending after November 15, 2006 and is required to be
      adopted by the Company in its fiscal year ending December 30, 2006. The
      Company is currently assessing the impact of the adoption of SAB 108.




In
      September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined
      Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
      No. 87, 88, 106 and 132(R).” SFAS No. 158 requires an employer to recognize the
      overfunded or underfunded status of a defined benefit postretirement plan as
      an
      asset or liability in its statement of financial position and recognize changes
      in the funded status in the year in which the changes occur. SFAS No. 158 is
      effective for fiscal years ending after December 15, 2006 and is required to
      be
      adopted by the Company in its fiscal year ending December 30, 2006.




Based
      on the funded status of our plan obligations disclosed in Note 12 to
      our Annual Report on Form 10-K for the year ended December 31, 2005, the
      estimated impact of adopting SFAS No. 158 would have been a reduction to
      comprehensive income at December 31, 2005 of approximately $2,500, with no
      impact to our consolidated statements of income or cash flows. There will be
      no
      effect on our Restated Credit Facility and underlying debt covenants.
      As the actual impact of adopting SFAS No. 158 will be dependent upon the fair
      value of the plan assets and the amount of projected benefit obligations
      measured as of December 30, 2006, the above estimated amount may not be
      reflective of the actual impact of the


adoption
      at December 30, 2006.




13




**Item
      2. Management’s Discussion and Analysis of Financial Conditions and Results of
      Operations**





*You
      should read the following discussion and analysis in conjunction with our
      financial statements and related notes included elsewhere in this report. 
This report contains forward-looking statements relating to future events and
      our future performance within the meaning of Section 27A of the Securities
      Act
      of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
      as
      amended, including, without limitation, statements regarding our expectations,
      beliefs, intentions or future strategies that are signified by the words
“anticipates,”  “believes,”  “estimates,”  “expects,” 
“intends,”  “plans,”  “potential,”  “predicts,” 
“projects” or similar words or phrases, although not all forward-looking
      statements contain such identifying words.  All forward-looking statements
      included in this report are based on information available to us on the date
      hereof.  It is routine for our internal projections and expectations to
      change as the year or each quarter in the year progress, and therefore it should
      be clearly understood that the internal projections and beliefs upon which
      we
      base our expectations may change prior to the end of each quarter or the
      year.  Although these expectations may change, we are under no obligation
      to inform you if they do.  Actual events or results may differ materially
      from those contained in the projections or forward-looking statements. 
Factors that could cause or contribute to such differences include those
      discussed below and elsewhere in this report, particularly in the section
      captioned “PART II - OTHER INFORMATION, Item 1A - Risk
      Factors.”*





**Management
      Overview**




We
      are a
      global intimate apparel company with a portfolio of established, well-known
      brands, top-selling products and an iconic heritage. We design, source and
      market an extensive range of intimate apparel products, including bras, panties
      and shapewear. We sell through multiple distribution channels, including
      department stores and national chain stores, mass merchants (including warehouse
      clubs), other (including specialty retailers, off-price retailers and licensing
      income), our company-operated outlet stores and our websites.





We
      sell
      our products under some of the most recognized brands in the intimate apparel
      industry, including Maidenform ® ,
      Flexees ® ,
      Lilyette ® ,
      Sweet
      Nothings ® ,
      Rendezvous ® ,
      Subtract ® ,
      Bodymates ® and Self
      Expressions ® .
      Our
      Maidenform ® *,* Flexees ® and
      Lilyette ® brands
      are broadly sold in department stores and national chain stores. Our other
      brands are distributed through national chain stores and selected mass
      merchants. These other brands carry our corporate endorsement and leverage
      our
      product technology, but are separate brands with distinctly different logos.
      In
      addition to our owned brands, we also supply private brand products to selected
      retailers.





**Trends
      in Our Business**





We
      operate in two segments, wholesale and retail. Our wholesale segment includes
      both our domestic and international wholesale markets. Our retail segment
      includes our company-operated outlet stores and our websites. We have identified
      many near-term opportunities for growth and operational improvements, as well
      as
      challenges to our business. In particular, management believes that there are
      many factors influencing the intimate apparel industry, including but not
      limited to: consistent demand for foundation garments, consumer demand for
      product innovation and leading brands, sourcing and supply chain efficiencies,
      continued growth of the mass merchant channel, pressure from retailers caused
      by
      the ongoing consolidation in the retail industry, increases in the cost of
      the
      raw materials used in intimate apparel products and uncertainty surrounding
      import restrictions.





We
      believe we are well-positioned to capitalize on or address these trends by,
      among other things:





•
      increasing consumer identification with our brands through further marketing
      investments;


•
      continuing to launch innovative products;


•
      increasing our presence in department stores and national chain stores through
      the use of Maidenform ® ,
      Flexees ® ,
      Lilyette ® ,
      Rendezvous ® ,
      Subtract ® and
      private brands;


•
      increasing our presence in the mass merchant channel through the use of our
      Sweet Nothings ® ,
      Bodymates ® ,
      Self
      Expressions ® and
      private brands;


•
      expanding our international presence;


•
being
      a
      marketer, rather than a manufacturer, of intimate apparel by sourcing all of
      our
      products from third-party suppliers;


•
making
      selective acquisitions, entering into licenses, and developing products and
      marketing that will complement our existing products or distribution channels;
      and


•
      merchandising, marketing and selling private brand products to selected
      retailers.




14




*Wholesale
      Segment*





The
      following trends are among the key variables that will affect our wholesale
      segment:





*Department
      Stores and National Chain Stores.* The
      department stores and national chain stores are where we generally sell the
      Maidenform ® ,
      Flexees ® and
      Lilyette ® brands.
      We plan to continue to invest in increasing our net sales with department store
      customers, which we believe is important to our long-term positioning in the
      channel. There has been a growing trend toward consolidation of department
      stores, such as the merger of Federated Department Stores, Inc. and May Company.
      We expect the rate of our future net sales growth with department stores to
      be
      moderated by the reduction in both the number of department store customers
      and
      the number of doors (distinct locations operated by a particular retailer)
      operated by those customers. We have grown both our market share and our net
      sales significantly in the past several years with national chain stores. We
      expect to see continued growth with national chain stores in the future as
      consumers continue to seek out value alternatives and as our customers in this
      channel continue to open new doors. We have customers located outside the United
      States that purchase our Maidenform ® ,
      Flexees ® and
      Lilyette ® brands.
      The majority of these net sales to these customers are included in the
      department store and national chain store channel.





*Mass
      Merchants.* The
      mass
      merchant channel includes both mass merchants and warehouse clubs. We intend
      to
      improve our penetration with mass merchants through the use of our brands Sweet
      Nothings ® ,
      Bodymates ® ,
      and
      Self Expressions ® as well
      as private brands. We have experienced significant growth in this channel over
      the past several years and expect to achieve growth in the future as we are
      able
      to increase both the floor space and number of doors in which our products
      are
      sold. We expect that both our net sales to this channel and our net sales to
      this channel as a percentage of our total net sales is likely to increase over
      time. The volume and mix of net sales of our brands and of private label in
      the
      mass merchants channel can vary from period-to-period based upon strategic
      changes that our customers may implement from time-to-time. Net sales to
      customers in the mass channel that are located outside the United States are
      included in this channel.





*Other.* Our
      net
      sales from this channel, which include sales to specialty retailers and to
      off-price retailers, have historically been a relatively small component of
      our
      overall net sales. We participate in private brands in the specialty retailer
      area as opportunities present themselves. Because of fluctuations in
      opportunities in this channel, we continually evaluate our growth opportunities.
      Our licensing income is included in this channel as well as sales to foreign
      distributors.





We
      will
      selectively target strategic acquisitions or licenses to grow our consumer
      base
      and would utilize the acquired companies to complement the products, channels
      and geographic reach of our existing portfolio. We believe that acquisitions
      could enhance our product offerings to retailers and provide potential growth.
      We believe we can leverage our core competencies such as product development,
      brand management, logistics and marketing to create significant value from
      the
      acquired businesses.





*Retail
      Segment*





We
      believe our retail sales volume is driven by our ability to service our existing
      consumers and obtain new consumers, as well as overall general economic
      conditions, such as the general retail environment, that can affect our
      consumers and ultimately their levels of overall spending. Additionally,
      identifying optimal retail outlet locations, favorable leasing arrangements,
      and
      improving our store productivity are factors important to growing our retail
      segment’s net sales. We also sell our products through our websites, *www.maidenform.com* ** and *www.maidenform.co.uk* *.* Although
      we currently do not generate a significant amount of net sales through these
      sites, we do expect it to continue to grow.





Our
      objectives in our retail segment are to continue to increase the productivity
      of
      our portfolio of stores through effective merchandising and focused advertising,
      as well as selectively closing a few of our less productive locations and
      potentially opening new stores in more productive locations. Even in those
      situations where we selectively close less productive outlet stores and do
      not
      open a new location in that region, we believe those consumers still purchase
      many of our Maidenform brands from our other outlet stores, our websites or
      our
      wholesale segment customers that carry these brands. Historically, we have
      primarily sold excess and, to a lesser extent, obsolete inventories through
      our
      outlet stores at a higher margin than that achieved through other liquidation
      alternatives.




15




***Definitions***




In
      reviewing our operating performance, we evaluate both the wholesale and retail
      segments by focusing on each segment’s operating income, cash flows from
      operations and inventory turns.





*Net
      Sales* .
      Our net
      sales are derived from two operating segments, wholesale and retail. Our net
      sales in the wholesale segment are sales recorded net of cooperative advertising
      allowances, sales returns, sales discounts, and markdown allowances provided
      to
      our customers. Net sales in our retail segment are recorded at the
      point-of-sale.





*Cost
      of Sales* .
      During
      2005, we closed our remaining manufacturing facilities in Mexico and Florida;
      therefore, the principal elements of our cost of sales are for finished goods
      inventories purchased from our sourced vendors. Included in cost of sales and
      affecting our overall gross margins are freight expenses from the manufacturers
      to our distribution centers in situations where such expenses are charged
      separately. Also included in cost of sales is the cost of warehousing, labor
      and
      overhead related to receiving and warehousing at our distribution centers,
      and
      depreciation of assets related to our receiving and warehousing in our
      distribution centers. Direct labor, cost of fabrics, as well as raw materials
      for fabrics, are the primary components driving the overall cost of our sourced
      finished goods inventories from our sourcing vendors.





*Selling,
      General and Administrative (SG&A).* Our
      SG&A expenses include all of our marketing, selling, distribution and
      general and administrative expenses for both the wholesale and retail segments
      (which include our retail outlet store payroll and related benefits), and rent
      expense. General and administrative expenses include management payroll,
      benefits, travel, information systems, accounting, insurance and legal.
      Additionally, depreciation related to the shipping function in our distribution
      centers and our corporate office assets such as furniture, fixtures, and
      equipment, as well as amortization of intellectual property, is included in
      SG&A.





*Income
      Taxes.* We
      account for income taxes using the liability method, which recognizes the amount
      of income tax payable or refundable for the current year and recognizes deferred
      tax liabilities and assets for the future tax consequences of the events that
      have been recognized in the financial statements or tax returns. We routinely
      evaluate all deferred tax assets to determine the likelihood of their
      realization and record a valuation allowance if it is more likely than not
      that
      a deferred tax asset will not be realized. Net operating loss carryforwards
      (NOLs) enable a company to apply net operating losses incurred during a current
      period against a future period's profits in order to reduce cash tax liabilities
      in those future periods. In periods when a company is generating operating
      losses, its NOLs will increase. The tax effect of the NOLs is recorded as a
      deferred tax asset. If the company does not believe that it is more likely
      than
      not that it will be able to utilize the NOLs, it records a valuation allowance
      against the deferred tax asset. Additionally, Section 382 of the Internal
      Revenue Code ("Section 382") imposes limitations on a corporation's ability
      to utilize its NOLs if it experiences an "ownership change." In general terms,
      an ownership change results from transactions increasing the ownership of
      certain existing stockholders and, or, new stockholders in the stock of a
      corporation by more than 50 percentage points during a three year testing
      period. Any unused annual limitation may be carried over to later years, and
      the
      amount of the limitation may, under certain circumstances, be increased to
      reflect both recognized and deemed recognized "built-in gains" that occur during
      the 60-month period after the ownership change. Upon emergence from bankruptcy
      in 1999, our NOLs were subject to Section 382 limitations. As a result of
      the acquisition in 2004, we experienced a change in control as defined by
      Section 382. As a result of this ownership change, the utilization of our
      NOLs were subject to a new annual limitation under Section 382. Subsequent
      to the acquisition, sales of our shares by others have resulted in additional
      changes in control for the purpose of Section 382; however, the annual
      limitation of our NOLs has not changed. At December 31, 2005, we had
      approximately $73.8 million of NOLs available for utilization in the years
      from 2006 through 2023.




16




**Results
      of Operations**




**Three
                  months ended**
              
              **Nine
                  months ended****September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005**
              
              **September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005****OPERATING
                  DATA: (in millions)**Wholesale
                  sales
              
              $
              96.5
              
              $
              83.6
              
              $
              289.5
              
              $
              261.3Retail
                  sales
              
              
              17.3
              
              
              16.5
              
              
              42.3
              
              
              41.3Net
                  sales
              
              
              113.8
              
              
              100.1
              
              
              331.8
              
              
              302.6Cost
                  of sales
              
              
              71.0
              
              
              63.4
              
              
              206.9
              
              
              193.6Gross
                  profit
              
              
              42.8
              
              
              36.7
              
              
              124.9
              
              
              109.0Selling,
                  general and administrative expenses
              
              
              25.7
              
              
              28.7
              
              
              77.1
              
              
              76.9Operating
                  income
              
              $
              17.1
              
              $
              8.0
              
              $
              47.8
              
              $
              32.1
  **As
                  a percentage of net sales****Three
                  months ended**
              
              **Nine
                  months ended****September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005**
              
              **September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005****OPERATING
                  DATA:**Wholesale
                  sales
              
              
              84.8
              %
              
              83.5
              %
              
              87.3
              %
              
              86.4
              %Retail
                  sales
              
              
              15.2
              
              
              16.5
              
              
              12.7
              
              
              13.6Net
                  sales
              
              
              100.0
              
              
              100.0
              
              
              100.0
              
              
              100.0Cost
                  of sales
              
              
              62.4
              
              
              63.3
              
              
              62.4
              
              
              64.0Gross
                  profit
              
              
              37.6
              
              
              36.7
              
              
              37.6
              
              
              36.0Selling,
                  general and administrative expenses
              
              
              22.6
              
              
              28.7
              
              
              23.2
              
              
              25.4Operating
                  income
              
              
              15.0
              %
              
              8.0
              %
              
              14.4
              %
              
              10.6
              %


Our
      net
      sales are derived from two segments, wholesale and retail.  Our net sales
      within the wholesale segment are grouped by channel, based upon the brands
      we
      sell and the customers we sell them to, as follows: (1) department stores and
      national chain stores, (2) mass merchants and (3) other.





Our
      department stores and national chain stores channel primarily consists of sales
      of our Maidenform ® ,
      Flexees ® ,
      Lilyette ® ,
      and
      private brands on a worldwide basis to customers within this category.
 Within the mass merchant channel, we sell brands such as Sweet
      Nothings ® ,
      Bodymates ® ,
      Self
      Expressions ® and
      private brands that are primarily dedicated to specific customers.  These
      brands are all sold on a worldwide basis to mass merchants and, to a lesser
      degree, warehouse clubs. Our remaining sales are grouped within a channel
      designated as other and include private brand products sold to specialty
      retailers and all brand sales to off-price retail stores. In addition, licensing
      income is included in our other channel.




17




**Three
                  months ended**
              
              
              **Nine
                  months ended****September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005**
              
              **$**
                  change
              
              **%**
                **change**
              
              
              **September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005**
              
              **$**
                  **change**
              
              **%**
                **change**Department
                  Stores andNational
                  Chain Stores
              
              $
              58.3
              
              $
              54.8
              
              $
              3.5
              
              
              6.4
              %
              
              $
              177.2
              
              $
              160.4
              
              $
              16.8
              
              
              10.5
              %Mass
                  Merchant
              
              
              25.4
              
              
              15.1
              
              
              10.3
              
              
              68.2
              %
              
              
              75.5
              
              
              60.3
              
              
              15.2
              
              
              25.2
              %Other
              
              
              12.8
              
              
              13.7
              
              
              (0.9
              )
              
              -6.6
              %
              
              
              36.8
              
              
              40.6
              
              
              (3.8
              )
              
              -9.4
              %Total
                  Wholesale
              
              
              96.5
              
              
              83.6
              
              
              12.9
              
              
              15.4
              %
              
              
              289.5
              
              
              261.3
              
              
              28.2
              
              
              10.8
              %Retail
              
              
              17.3
              
              
              16.5
              
              
              0.8
              
              
              4.8
              %
              
              
              42.3
              
              
              41.3
              
              
              1.0
              
              
              2.4
              %Total
                  Consolidated Net Sales
              
              $
              113.8
              
              $
              100.1
              
              $
              13.7
              
              
              13.7
              %
              
              $
              331.8
              
              $
              302.6
              
              $
              29.2
              
              
              9.6
              %


Our
      retail segment consists of outlet stores, clearance stores and internet sales.
      We had 77 stores for both periods ended September 30, 2006 and October 1, 2005.
      In addition, our mix of products sold between bras, shapewear, and panties
      in
      the wholesale segment for the three and nine months ended September 30, 2006
      and
      October 1, 2005, respectively, is summarized below:




**Three
                  months ended**
              
              **Nine
                  months ended****September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005**
              
              **September
                  30,**
                **2006**
              
              **October
                  1,**
                **2005**Bras
              
              
              68%
              
              
              67%
              
              
              68%
              
              
              69%Shapewear
              
              
              20%
              
              
              20%
              
              
              21%
              
              
              21%Panties
              
              
              12%
              
              
              13%
              
              
              11%
              
              
              10%100%
              
              
              100%
              
              
              100%
              
              
              100%




***Net
      Sales***




Consolidated
      net sales increased by $13.7 million, or 13.7%, from $100.1 million for the
      three months ended October 1, 2005 to $113.8 million for the three months ended
      September 30, 2006. Consolidated net sales increased by $29.2 million, or 9.6%,
      from $302.6 million for the nine months ended October 1, 2005 to $331.8 million
      for the nine months ended September 30, 2006.





Wholesale
      segment net sales increased by $12.9 million, or 15.4%, from $83.6 million
      for
      the three months ended October 1, 2005 to $96.5 million for the three months
      ended September 30, 2006. Total international sales, which are included in
      the
      wholesale segment, decreased by $0.4 million, or 4.9%, from $8.2 million for
      the
      three months ended October 1, 2005 to $7.8 million for the three months ended
      September 30, 2006, primarily due to slightly lower sales in the U.K. market.
      Wholesale net sales are derived from the following channels: department stores
      and national chain stores; mass merchants; and other. Our department stores
      and
      national chain stores net sales increased by $3.5 million, or 6.4%, from $54.8
      million for the three months ended October 1, 2005 to $58.3 million for the
      three months ended September 30, 2006. This increase was driven by strong sales
      from Flexees ® and
      Lilyette ® product
      lines. Specific performance drivers for the third quarter included the
      introduction of the Lite TM Collection, continued penetration of the Lilyette ® full-figure brand and solid performance of the Flexees ® contemporary-firm
      products that utilize sew-free technology. Our mass merchant channel net sales
      increased by $10.3 million, or 68.2%, from $15.1 million for the three months
      ended October 1, 2005 to $25.4 million for the three months ended September
      30,
      2006. Particular factors that contributed to these third quarter results
      included an expanded full-figure assortment for one mass customer, continued
      replenishment for another customer’s private brand styles and a new program with
      a warehouse customer. Other net sales, which include sales to specialty
      retailers, off-price retailers and licensing income, decreased by $0.9 million,
      or 6.6%, from $13.7 million for the three months ended October 1, 2005 to $12.8
      million for the three months ended September 30, 2006. This decrease was due
      to
      lower liquidation sales, which was largely offset by a program with a specialty
      retailer and greater licensing income.




18





Net
      sales
      in our wholesale segment increased by $28.2 million, or 10.8%, from $261.3
      million for the nine months ended October 1, 2005 to $289.5 million for the
      nine
      months ended September 30, 2006. International sales increased $1.1 million,
      or
      5.3%, from $20.9 million for the nine months ended October 1, 2005 to $22.0
      million for the nine months ended September 30, 2006. Of the $28.2 million
      increase in wholesale segment net sales during the nine months ended September
      30, 2006, $16.8 million of the total increase was from increased sales in the
      department stores and national chain stores driven by strong sales from
      Flexees ® and
      Lilyette ® product
      lines. An additional $15.2 million increase came from mass merchants, primarily
      as a result of reasons mentioned above. These increases were partially offset
      by
      a decrease in sales of $3.8 million from other, primarily as a result of a
      reduction in liquidation sales.




Net
      sales
      in our retail segment increased $0.8 million, or 4.8%, from $16.5 million for
      the three months ended October 1, 2005 to $17.3 million for the three months
      ended September 30, 2006. Net sales in our retail segment increased $1.0
      million, or 2.4%, from $41.3 million for the nine months ended October 1, 2005
      to $42.3 million for the nine months ended September 30, 2006. We had 77 stores
      for both periods ended September 30, 2006 and October 1, 2005. These increases
      in retail net sales were driven by increased internet sales, increased same
      store sales and favorable product mix for the three and nine months ended
      September 30, 2006.  Same stores sales, defined as sales from stores open
      for more than one year, for the three month period ended September 30, 2006
      increased 3.8% and for the nine month period ended September 30, 2006 increased
      4.1%, largely driven by a change in overall product mix. Our internet sales
      increased by $0.4 million, or 57.1%, from $0.7 million for the three months
      ended October 1, 2005 to $1.1 million for the three months ended September
      30,
      2006. Our internet sales increased by $0.8 million, or 44.4%, from $1.8 million
      for the nine months ended October 1, 2005 to $2.6 million for the nine months
      ended September 30, 2006.





***Gross
      Profit***




Consolidated
      gross profit increased by $6.1 million, or 16.6%, from $36.7 million for the
      three months ended October 1, 2005 to $42.8 million for the three months ended
      September 30, 2006. As a percentage of net sales, gross margins increased by
      90
      basis points from 36.7% for the three months ended October 1, 2005 to 37.6%
      for
      the three months ended September 30, 2006. Consolidated gross profit increased
      by $15.9 million, or 14.6%, from $109.0 million during the nine months ended
      October 1, 2005 to $124.9 million for the nine months ended September 30,
      2006.  As
      a
      percentage of net sales, gross profit increased by 160 basis points from 36.0%
      for the nine month periods ended October 1, 2005 to 37.6% for the nine months
      ended September 30, 2006. Consolidated gross margins for the three and nine
      months ended October 1, 2005 included unusual and non-recurring items as
      discussed below.





Gross
      profit as a percentage of sales for the wholesale segment was 32.9% for the
      three months ended October 1, 2005 as compared to 34.1% for the three months
      ended September 30, 2006. Gross margins in the third quarter of 2006 were driven
      by new product innovation, sourcing initiatives and reduced liquidation sales,
      which were offset in part by higher net sales in the mass merchant channel
      as
      well as higher inventory reserves. Our gross margins for the three months ended
      October 1, 2005 included unfavorable manufacturing variances of $1.9 million
      as
      a result of plant closings and lower inventory reserves. Gross profit as a
      percentage of sales for the wholesale segment was 33.3% for the nine months
      ended October 1, 2005 as compared to 34.8% for the nine months ended September
      30, 2006, as a result of the aforementioned factors. Our gross margins for
      the
      nine months ended October 1, 2005 included unfavorable manufacturing variances
      of $5.5 million as a result of plant closings, while favorably affected by
      the
      absorption of overhead expenses and lower inventory reserves.







Gross
      profit for the retail segment was 55.8% for the three months ended October
      1,
      2005 as compared to 57.2% for the three months ended September 30, 2006 and
      53.5% for the nine months ended October 1, 2005 as compared to 57.0% for the
      nine months ended September 30, 2006. Improved performance in the retail segment
      for both the three and nine-month periods ended September 30, 2006 was largely
      driven by a change in overall product mix and sourcing initiatives.





***Selling,
      General and Administrative Expenses (SG&A)***




Consolidated
      SG&A decreased by $3.0 million, or 10.5%, from $28.7 million for the three
      months ended October 1, 2005 to $25.7 million for the three months ended
      September 30, 2006. As a percentage of net sales, SG&A decreased from 28.7%
      for the three months ended October 1, 2005 to 22.6% for the three months ended
      September 30, 2006. Consolidated SG&A for the three months ended October 1,
      2005 included unusual and non-recurring items as discussed below.




19





SG&A
      for our wholesale segment, which includes corporate-related expenses, decreased
      by $3.2 million, or 14.9%, from $21.5 million for the three months ended October
      1, 2005 to $18.3 million for the three months ended September 30, 2006. As
      a
      percentage of net sales, wholesale segment SG&A decreased from 25.7% for the
      three months ended October 1, 2005 to 19.0% for the three months ended September
      30, 2006. The decrease of $3.2 million is a result of non-recurring initial
      public offering expenses of $1.9 million, special cash bonus paid in connection
      with the credit facility amendment of $1.5 million and severance expenses of
      $0.3 million that were incurred in the third quarter of 2005. Partially
      offsetting these decreases were increased advertising expenses of $1.2 million
      and a decrease in other expenses of $0.7 million. Retail SG&A increased
      slightly by $0.2 million, or 2.8%, from $7.2 million for the three months ended
      October 1, 2005 to $7.4 million for the three months ended September 30, 2006.




Consolidated
      SG&A increased by $0.2 million, or 0.3%, from $76.9 million for the nine
      months ended October 1, 2005 to $77.1 million for the nine months ended
      September 30, 2006. However, as a percentage of net sales, SG&A decreased
      from 25.4% for the nine months ended October 1, 2005 to 23.2% for the nine
      months ended September 30, 2006. Consolidated SG&A for the nine months ended
      October 1, 2005 included unusual and non-recurring items as discussed
      below.





SG&A
      for our wholesale segment, which includes corporate-related expenses, increased
      by $0.3 million, or 0.5%, from $56.2 million for the nine months ended October
      1, 2005 to $56.5 million for the nine months ended September 30, 2006. However,
      as a percentage of net sales, wholesale segment SG&A decreased from 21.5%
      for the nine months ended October 1, 2005 to 19.5% for the nine months ended
      September 30, 2006. The increase of $0.3 million is a result of increased
      payroll and related benefits, including incentive and other compensation of
      $3.5
      million, increased professional fees and other costs totaling $1.0 million
      associated primarily with being a public company and Sarbanes-Oxley readiness,
      increased advertising expense of $1.5 million and increased other expenses
      of
      $0.6 million. Offsetting these increases were non-recurring initial public
      offering expenses of $3.8 million, special cash bonus paid in connection with
      the credit facility amendment of $1.5 million and severance expenses of $1.0
      million that were incurred in the third quarter of 2005. Retail SG&A
      decreased by $0.1 million, or 0.5%, from $20.7 million for the nine months
      ended
      October 1, 2005 to $20.6 million for the three months ended September 30, 2006.





***Operating
      Income***




Our
      consolidated operating income increased by $9.1 million, or 113.8%, from $8.0
      million for the three months ended October 1, 2005 to $17.1 million for the
      three months ended September 30, 2006. Our consolidated operating income
      increased by $15.7 million, or 48.9%, from $32.1 million for the nine months
      ended October 1, 2005 to $47.8 million for the nine months ended September
      30,
      2006.





For
      the
      foregoing reasons, operating income for the wholesale segment increased by
      $8.6
      million, or 143.3%, from $6.0 million during the three months ended October
      1,
      2005 to $14.6 million during the three months ended September 30, 2006.
      Operating income for the wholesale segment increased by $13.6 million, or 44.3%,
      from $30.7 million during the nine months ended October 1, 2005 to $44.3 million
      during the nine months ended September 30, 2006.





Also,
      for
      the reasons discussed above, operating income for the retail segment increased
      by $0.5 million, or 25.0%, from $2.0 million during the three months ended
      October 1, 2005 to $2.5 million during the three months ended September 30,
      2006. The retail segment’s operating income increased by $2.1 million, or 150.0%
      from $1.4 million during the nine months ended October 1, 2005 to $3.5 million
      during the nine months ended September 30, 2006.




***Interest
      Expense, Net***




Interest
      expense, net decreased by $0.4 million, or 15.4%, from $2.6 million for the
      three months ended October 1, 2005 to $2.2 million for the three months ended
      September 30, 2006. This decrease was primarily the result of a lower average
      debt outstanding. The average balance of total debt outstanding decreased from
      $152.2 million for the three months ended October 1, 2005 to $122.9 million
      for
      the three months ended September 30, 2006, and the average interest rate during
      the three months ended October 1, 2005 was 6.3% as compared to a 6.8% average
      interest rate during the three months ended September 30, 2006, and is primarily
      due to the increase in LIBOR.





Interest
      expense, net decreased $7.1 million, or 52.6%, from $13.5 million for the nine
      months ended October 1, 2005 to $6.4 million for the nine months ended September
      30, 2006. This decrease was primarily the result of a lower average debt
      outstanding and a decrease in deferred financing costs of $4.9 million,
      associated with the amendment of the Company’s credit facility on June 29, 2005,
      included in the comparative nine-month period ended October 1, 2005. The average
      balance of total debt outstanding decreased from $146.3 million for the nine
      months ended October 1, 2005 to $130.1 million for the nine months ended
      September 30, 2006 and the average interest rate during the nine months ended
      October 1, 2005 was 7.0% as compared to a 6.4% average interest rate during
      the
      nine months ended September 30, 2006.




20








***Income
      Tax Expense***




We
      review
      our annual effective tax rate on a quarterly basis and we make necessary changes
      if information or events warrant such changes. The annual effective tax rate
      is
      forecasted quarterly using actual historical information and forward-looking
      estimates. The estimated annual effective tax rate may fluctuate due to changes
      in forecasted annual operating income; changes to the valuation allowance for
      deferred tax assets; changes to actual or forecasted permanent book to tax
      differences; impacts from future tax settlements with state, federal or foreign
      tax authorities; or impacts from tax law changes. Our effective income tax
      rate
      for the three and nine-month periods ended September 30, 2006 was 40.4% and
      40.7%, respectively, as compared to an effective income tax rate for the three
      and nine-month periods ended October 1, 2005 of 60.7% and 50.9%, respectively.
      Our effective income tax rate for the three and nine-month periods ended October
      1, 2005 was higher than the normal statutory income tax rate, due to the tax
      effect of non-deductible expenses associated with our initial public offering
      in
      July 2005.





Because
      of significant net operating loss carryforwards (NOLs) available to offset
      income taxes payable, our cash income taxes to be paid will be at a rate
      significantly lower than our effective income tax rate. These NOLs have the
      effect of reducing the effective income tax rate as reported on our income
      statement to a lower income tax rate to be paid on a cash basis.





***Net
      Income***




For
      the
      foregoing reasons, our net income increased by $6.8 million from $2.1 million
      for the three months ended October 1, 2005 to $8.9 million for the three months
      ended September 30, 2006. Our net income increased by $15.4 million from $9.1
      million for the nine months ended October 1, 2005 to $24.5 million for the
      nine
      months ended September 30, 2006.




***Preferred
      Stock Dividends and Changes in Redemption Value***




For
      the
      three and nine months ended October 1, 2005, preferred stock dividends and
      changes in redemption value, including a special preferred stock dividend,
      was
      $1.7 million and $17.3 million, respectively. All outstanding shares of
      preferred stock, including shares of preferred stock acquired upon the exercise
      of all outstanding options to purchase shares of our preferred stock, were
      redeemed in connection with our initial public offering in July 2005.




***Net
      Income Available to Common Stockholders***




For
      the
      foregoing reasons, the net income available to common stockholders for the
      three
      months ended September 30, 2006 was $8.9 million as compared to $0.4 million
      for
      the three months ended October 1, 2005. The net income available to common
      stockholders for the nine months ended September 30, 2006 was $24.5 million
      as
      compared to a net loss of $8.1 million for the nine months ended October 1,
      2005.





**Liquidity
      and Capital Resources**




*Operating
      activities.* Cash
      flows provided by operating activities were $12.4 million in the nine months
      ended September 30, 2006 compared to $0.3 million in the nine months ended
      October 1, 2005. This increase in cash provided by operating activities was
      primarily driven by an increase in net income of $15.4 million offset by an
      increase in the use of working capital. The increase in accounts receivable
      for
      the nine months ended at September 30, 2006 was $22.6 million compared to an
      increase of $27.5 million for the nine months ended October 1, 2005 and was
      a
      result of higher wholesale net sales and the timing of cash collections. The
      increase in inventories for the nine months ended September 30, 2006 was $14.9
      million compared to an increase of $3.8 million for the nine months ended
      October 1, 2005. The increase in inventory at September 30, 2006 was a result
      of
      several factors including, among other things, higher sales volume and an
      emphasis on higher safety stocks for improved order fulfillment for our
      customers and to meet ongoing sales demand of our products. Inventory at
      September 30, 2006 rose to $50.1 million from $40.9 million at October 1, 2005
      and up from $35.3 million at December 31, 2005. The decrease in prepaid expenses
      and other current and non-current assets for the nine months ended September
      30,
      2006 was $1.5 million compared to an increase of $4.6 million for the nine
      months ended October 1, 2005. The prior year prepaid expenses and other current
      and non-current assets included assets held for sale which were sold in the
      fourth quarter of 2005. The increase in accrued expenses and other current
      and
      non-current liabilities for the nine months ended September 30, 2006 was $2.4
      million compared to a decrease of $4.4 million for the nine months ended October
      1, 2005, and is primarily due to timing of payments.




21




*Investing
      activities.* Cash
      flows used in investing activities were $1.7 million in the nine months ended
      September 30, 2006 compared to $0.1 million cash flows provided by investing
      activities in the nine months ended October 1, 2005. Capital expenditures for
      the nine months ended September 30, 2006 increased by $0.3 million when compared
      to the nine months ended October 1, 2005.  The
      prior
      year includes proceeds received from the sale of assets associated with the
      plants which were closed during the nine months ended October 1,
      2005.





*Financing
      activities.* Cash
      flows used in financing activities were $25.2 million in the nine months ended
      September 30, 2006 compared to cash flows used in financing activities of $17.8
      million in the nine months ended October 1, 2005. The increase in cash used
      in
      financing activities is primarily due to voluntary prepayments of our long
      term
      debt outstanding totaling $17.5 million and the repurchase of common stock
      for
      treasury stock as part of our $20 million stock repurchase program totaling
      $7.6
      million described below.





In
      February 2006, the Board of Directors approved a stock repurchase program in
      an
      amount up to $20 million. Through September 30, 2006, we repurchased $7.6
      million of common stock at an average price per share of $11.30. The stock
      repurchase program, which is open-ended, allows us to repurchase our shares
      of
      common stock on the open market, depending on market conditions and other
      corporate considerations, from available cash flow and borrowings under our
      revolving facility. Our credit facility was amended to permit the stock
      repurchase program and to allow borrowings to fund this program, subject to
      certain restrictions and limitations set forth in the amendment to our credit
      facility.





At
      September 30, 2006, we had $120.0 million outstanding under our credit facility.
      At September 30, 2006, approximately $47.7 million was available for borrowings
      under the revolving facility, after giving effect to $2.3 million of outstanding
      letters of credit.  We
      use
      the letters of credit as collateral for our workers’ compensation insurance
      programs and bonds issued on our behalf to secure our obligation to pay customs
      duties. We were in compliance with all debt covenants at September 30, 2006.
      We
      continued to de-leverage our balance sheet with $17.5 million of voluntary
      debt
      prepayments during the nine months ended September 30, 2006. On October 31,
      2006, we made an additional payment of $5.0 million which is not reflected
      on
      our balance sheet as of September 30, 2006. With each debt prepayment, our
      amortization schedule is revised.  Our
      next
      scheduled mandatory principal payment is not due until October 3, 2009. At
      September 30, 2006, we had a debt to earnings before interest, taxes,
      depreciation and amortization (EBITDA) ratio of 2.19 to 1.





We
      believe that our existing cash balances and available borrowings under our
      revolving facility, along with our future cash flow from operations, will enable
      us to meet our liquidity needs and capital expenditure requirements for at
      least
      the next 12 months.





***Contractual
      Obligations***




We
      have
      various contractual obligations which are recorded as liabilities in our
      consolidated financial statements. Other items, such as certain purchase
      commitments and other executory contracts are not recognized as liabilities
      in
      our consolidated financial statements. For example, we are contractually
      committed to make certain minimum lease payments for the use of property under
      operating lease agreements.





The
      following table summarizes our significant contractual obligations and
      commercial commitments at September 30, 2006 and the future periods in which
      such obligations are expected to be settled in cash. In addition, the table
      below reflects the timing of principal payments on outstanding borrowings.




22




**Balance
                  of****fiscal**
              
              **In
                  fiscal**
              
              **In
                  fiscal**
              
              **In
                  fiscal**
              
              **In
                  fiscal****(in
                  millions)**
              
              **2006**
              
              **2007**
              
              **2008**
              
              **2009**
              
              **2010**
              
              **Thereafter**
              
              **Total**Long-term
                  debt (1)
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              19.9
              
              $
              100.1
              
              $
              -
              
              $
              120.0Interest
                  on long-term debt (2)
              
              
              2.2
              
              
              8.6
              
              
              8.6
              
              
              8.6
              
              
              3.6
              
              
              -
              
              
              31.6Operating
                  leases
              
              
              1.3
              
              
              4.0
              
              
              3.1
              
              
              1.7
              
              
              1.0
              
              
              3.0
              
              
              14.1Total
                  financial obligations
              
              
              3.5
              
              
              12.6
              
              
              11.7
              
              
              30.2
              
              
              104.7
              
              
              3.0
              
              
              165.7Purchase
                  obligations (3)
              
              
              36.1
              
              
              41.3
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              77.4Total
                  financial obligations and commitments
              
              $
              39.6
              
              $
              53.9
              
              $
              11.7
              
              $
              30.2
              
              $
              104.7
              
              $
              3.0
              
              $
              243.1


*(1)
      For the years 2006 through the expiration date of our credit facility, we may
      be
      required to make annual consolidated excess cash flow payments depending on
      applicable leverage ratios. On October 31, 2006, we made an additional payment
      of $5.0 million which is not reflected in the above table.*


*(2)
      The interest rate for the variable portion of long-term debt was the rate in
      effect at September 30, 2006.*


*(3)
      Unconditional purchase obligations are defined as agreements to purchase goods
      that are enforceable and legally binding on us and that specify all significant
      terms, including fixed or minimum quantities to be purchased; fixed, minimum,
      or
      variable price provisions; and the approximate timing of the transaction. The
      purchase obligations category above relates to commitments for inventory
      purchases. Amounts reflected in our condensed consolidated balance sheets in
      accounts payable or other current liabilities are excluded from the table
      above.*





In
      addition to the total contractual obligations and commitments included in the
      table above, we have pension and postretirement benefit obligations included
      in
      other non-current liabilities.





***Contingent
      Commitments and Contingencies***




We
      also
      have certain contractual arrangements that would require us to make payments
      or
      provide funding if certain circumstances occur. We do not currently expect
      that
      the remaining contingent commitments will result in any amounts being paid
      by
      us.





**Critical
      Accounting Policies and Estimates**




Our
      discussion and analysis of our financial condition and results of operations
      is
      based upon our condensed consolidated financial statements, which have been
      prepared in accordance with accounting principles generally accepted in the
      United States. The preparation of these financial statements requires us to
      make
      estimates and judgments that affect the reported amounts of assets, liabilities,
      revenues, expenses, and related disclosure of contingent assets and liabilities.
      We base our estimates on historical experience and on various other assumptions
      that we believe are reasonable under the circumstances, the results of which
      form the basis for making judgments about the carrying values of assets and
      liabilities that are not readily apparent from other sources. Actual results
      may
      differ from these estimates under different assumptions or conditions. A summary
      of our significant accounting policies and a description of accounting policies
      that we believe are most critical may be found in the Management’s Discussion
      and Analysis of Financial Conditions and Results of Operations included in
      our
      Annual Report on Form 10-K for the year ended December 31, 2005.





***Recently
      Issued Accounting Standards***





In
      July
      2006, the FASB issued FASB Interpretation No. 48 (FIN No. 48), “Accounting for
      Uncertainty in Income Taxes,” which clarifies the accounting for uncertainty in
      income taxes recognized in an enterprise’s financial statements in accordance
      with SFAS No. 109, “Accounting for Income Taxes.” This interpretation prescribes
      a recognition threshold and measurement attribute for the financial statement
      recognition and measurement of a tax position taken or expected to be taken
      in a
      tax return. This interpretation also provides guidance on derecognition,
      classification, interest and penalties, accounting in interim periods,
      disclosure, and transition. FIN No. 48 is effective for fiscal years
      beginning after December 15, 2006 and requires certain disclosures in our fiscal
      year ending December 30, 2006 Form 10-K. The Company is currently
      evaluating the impact of adopting this interpretation.




23




In
      September 2006, the Securities and Exchange Commission (the “SEC”) issued
      Staff Accounting Bulletin No. 108 (“SAB 108”), “Considering the Effects of
      Prior Year Misstatements when Qualifying Misstatements in Current Year Financial
      Statements,” which provides interpretive guidance on the consideration of the
      effects of prior year misstatements in quantifying current year misstatements
      for the purpose of a materiality assessment. SAB 108 is effective for companies
      with fiscal years ending after November 15, 2006 and is required to be
      adopted by the Company in its fiscal year ending December 30, 2006. The
      Company is currently assessing the impact of the adoption of SAB 108.




In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      (“SFAS”) No. 158, “Employers’ Accounting for Defined Benefit Pension and Other
      Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106 and
      132(R).” SFAS No. 158 requires an employer to recognize the overfunded or
      underfunded status of a defined benefit postretirement plan as an asset or
      liability in its statement of financial position and recognize changes in the
      funded status in the year in which the changes occur. SFAS No. 158 is effective
      for fiscal years ending after December 15, 2006 and is required to be adopted
      by
      the Company in its fiscal year ending December 30, 2006.




Based
      on
      the funded status of our plan obligations disclosed in Note 12 to our
      Annual Report on Form 10-K for the year ended December 31, 2005, the estimated
      impact of adopting SFAS No. 158 would have been a reduction to comprehensive
      income at December 31, 2005 of approximately $2.5 million with no
      impact to our consolidated statements of income or cash flows. There will be
      no
      effect on our Restated Credit Facility and underlying debt covenants.
      As the actual impact of adopting SFAS No. 158 will be dependent upon the fair
      value of the plan assets and the amount of projected benefit obligations
      measured as of December 30, 2006, the above estimated amount may not be
      reflective of the actual impact of the adoption at December 30,
      2006.







**Item
      3. Quantitative and Qualitative Disclosures about Market
      Risk**





*Foreign
      Currency Risk.* We
      do not
      believe that we have significant foreign currency transactional exposures.
      For
      the three and nine-month periods ended September 30, 2006, $7.4 million and
      $20.5 million, respectively, of our total net sales were in currencies other
      than the U.S. dollar. During the three and nine-month periods ended September
      30, 2006, our net sales were favorably impacted by $0.4 million and $0.4
      million, respectively, due to foreign exchange rates. Most of our purchases
      are
      denominated in U.S. dollars. Approximately 70% of our total sourcing is
      concentrated in two foreign countries, China and Indonesia. The impact of a
      10%
      unfavorable change in the exchange rate of the U.S. dollar against the
      prevailing market rates of the foreign currencies in which we have transactional
      exposures would be immaterial.





*Interest
      Rate Risk.* Interest
      rate risk is managed through a combination of variable and fixed rate debt
      composed of long-term instruments. The objective is to maintain a cost-effective
      mix that we deem appropriate and have entered into interest rate swap agreements
      to maintain that balance. At September 30, 2006, our debt portfolio was composed
      of variable-rate debt of which we hedge approximately 25% to a fixed-rate.
      With
      respect to our variable-rate debt, a 1% change in interest rates would be
      immaterial.





*Commodity
      Price Risk.* We
      are
      subject primarily to commodity price risk arising from fluctuations in the
      market prices of raw materials used in the garments purchased from our sourcing
      vendors if they pass along these increased costs. During the past five years,
      there has been no significant impact from commodity price fluctuations, nor
      do
      we currently use derivative instruments in the management of these risks. On
      a
      prospective basis, fluctuations in petroleum prices may also influence the
      prices of the related items such as chemicals, dyestuffs, man made fibers and
      foam. Any raw material price increase, as well as any increase in transportation
      costs, would increase our cost of sales and decrease our profitability unless
      we
      are able to pass our higher costs on to our customers.





*Inflation
      Risk.* We
      are
      affected by inflation and changing prices primarily through the cost of raw
      materials, increased operating costs and expenses, and fluctuations in interest
      rates. The effects of inflation on our net sales and operations have not been
      material in recent years. We do not believe that inflation risk is material
      to
      our business or our consolidated financial position, results of operations
      or
      cash flows.





*Seasonality.* We
      have
      not experienced any significant seasonal fluctuations in our net sales or our
      profitability.




24




**Item
      4. Controls and Procedures**





*Evaluation
      of Disclosure Controls and Procedures.*




Our
      management, including the Chief Executive Officer and Chief Financial Officer,
      evaluated the effectiveness of our “disclosure controls and procedures,” as that
      term is defined in Rule 13a-15(e) promulgated under the Securities Exchange
      Act
      of 1934, as amended (the “Exchange Act”), as of September 30, 2006. Based on
      that evaluation, the Chief Executive Officer and Chief Financial Officer
      concluded that the disclosure controls and procedures are effective to ensure
      that information required to be disclosed by us in the reports that we file
      or
      submit under the Exchange Act is recorded, processed, summarized and reported
      within the time periods specified in the Securities and Exchange Commission’s
      rules and forms, and to ensure that information is accumulated and communicated
      to our management, including the Chief Executive Officer and Chief Financial
      Officer, as appropriate to allow timely decisions regarding required
      disclosure.





*Changes
      in Internal Controls Over Financial Reporting.*




There
      were no changes in our internal controls over financial reporting during the
      quarter ended September 30, 2006 identified in connection with the evaluation
      thereof by our management, including the Chief Executive Officer and Chief
      Financial Officer, that have materially affected, or are reasonably likely
      to
      materially affect, our internal controls over financial reporting.




25




**PART
      II - OTHER INFORMATION**





**Item
      1. Legal Proceedings**


We
      are
      not currently a party to any material legal proceedings. We are subject to
      various claims and legal actions arising from time-to-time in the ordinary
      course of business. We do not believe that the outcome of any of these
      proceedings will have a material adverse effect on
      our financial conditions, results of operations or cash flows.





**Item
      1A. Risk Factors**




Risks
      that could have a negative impact on our business, results of operations and
      financial condition include: our growth cannot be assured and any growth may
      be
      unprofitable; our history of losses; potential fluctuations in our results
      of
      operations or rate of growth; our dependence on a limited number of customers;
      we have larger competitors with greater resources; retail trends in the intimate
      apparel industry, including consolidation and continued growth in the
      development of private brands, resulting in downward pressure on prices, reduced
      floor space and other harmful changes; failure to anticipate, identify or
      promptly react to changing trends, styles, or consumer preferences; our
      substantial leverage could adversely affect our financial condition; external
      events may disrupt our supply chain, result in increased cost of goods or an
      inability to deliver our products; events which result in difficulty in
      procuring or producing products on a cost-effective basis; increases in the
      prices of raw materials; changing international trade regulation, including
      as
      it relates to the imposition or elimination of quotas on imports of textiles
      and
      apparel; foreign currency exposure; unanticipated internal control weaknesses
      or
      ineffective disclosure controls and procedures; and the sufficiency of cash
      to
      fund operations and capital expenditures. This list is intended to identify
      only
      certain of the principal factors that could have a material and adverse impact
      on our business, results of operations and financial condition.  A more
      detailed description of each of these and other important risk factors can
      be
      found under the caption “Risk Factors” in our most recent Form 10-K, filed on
      March 29, 2006.






There
      are
      no material changes to the risk factors described in the Form 10-K, filed on
      March 29, 2006.




**Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds**





(a)
      None.


(b)
      None.


(c)
      Issuer purchases of equity securities:




**Total
                  number**
              
              **Maximum****of
                  shares**
              
              **dollar****Total**
              
              
              
              **repurchased**
              
              **value
                  of shares****number**
              
              **Average**
              
              **as
                  part of publicly**
              
              **that
                  may yet be****of
                  shares**
              
              **price
                  paid**
              
              **announced**
              
              **repurchased
                  under****Period**
              
              **repurchased**
              
              **per
                  share**
              
              **program****(1)**
              
              **the
                  program****(1)**January
                  1, 2006 - February 4, 2006
              
              
              -
              
              $
              -
              
              
              -
              
              $
              -February
                  5 - March 4, 2006
              
              
              344,000
              
              
              9.87
              
              
              344,000
              
              
              16,604,720March
                  5 - April 1, 2006
              
              
              59,800
              
              
              10.32
              
              
              59,800
              
              
              15,987,584April
                  2 - May 6, 2006
              
              
              72,600
              
              
              10.99
              
              
              72,600
              
              
              15,189,710May
                  7 - June 3, 2006
              
              
              46,800
              
              
              12.62
              
              
              46,800
              
              
              14,599,094June
                  4 - July 1, 2006
              
              
              56,200
              
              
              12.41
              
              
              56,200
              
              
              13,901,652July
                  2 - August 5, 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              -August
                  6 - September 2, 2006
              
              
              90,100
              
              
              16.26
              
              
              90,100
              
              
              12,436,626September
                  3 - September 30, 2006
              
              
              -
              
              
              -
              
              
              -
              
              
              -


(1) In
      February 2006, the Board of Directors approved a $20.0 million stock repurchase
      program, authorizing the repurchase of our common stock. We are authorized
      to
      make repurchases from time to time in the open market as market conditions
      warrant and pursuant to other parameters set by our Board of Directors.




26




**Item
      3. Defaults Upon Senior Securities**


None.





**Item
      4. Submission of Matters to a Vote of Security Holders**


None.





**Item
      5. Other Information**


None.





**Item
      6. Exhibits**


The
      following exhibits are filed as part of this Quarterly Report on Form
      10-Q:





31.1
            Certification
                by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a),
                as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002





31.2
            Certification
                by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a),
                as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002





32.1
            Certification
                by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





32.2
            Certification
                by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002




27


**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.




MAIDENFORM
              BRANDS,
              INC.(RegistrantDate: November
              8, 2006
            By:
            /s/ Dorvin
              D.
              LivelyName:
                Dorvin D. LivelyTitle:
                Chief Financial Officer (principal financial and accounting
                officer)




28




**EXHIBIT
      INDEX**





31.1
            Certification
                by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a),
                as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002





31.2
            Certification
                by Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a),
                as
                adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002





32.1
            Certification
                by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





32.2
            Certification
                by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





29