**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 July 1, 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
      August 4, 2006, there were 22,914,498 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 July 1, 2006 and December 31, 2005
            2Condensed
                Consolidated Statements of Income for the three and six months ended
                July
                1, 2006 and July 2, 2005
            3Condensed
                Consolidated Statements of Cash Flows for the six months ended July
                1,
                2006 and July 2, 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
            23Item
                4. Controls and Procedures
            24**PART
                II - OTHER INFORMATION**Item1.
                Legal Proceedings
            25Item1A.
                Risk Factors
            25Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            25Item
                3. Defaults Upon Senior Securities
            26Item
                4. Submission of Matters to a Vote of Security Holders
            26Item
                5. Other Information
            26Item
                6. Exhibits
            26








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)*****July
                1, 2006**
            
            **December
                31, 2005****Assets**Current
                assetsCash
                and cash equivalents
            
            $
            17,654
            
            $
            30,978Accounts
                receivable, net
            
            
            59,338
            
            
            34,169Inventories
            
            
            41,824
            
            
            35,255Deferred
                income taxes
            
            
            8,724
            
            
            8,724Prepaid
                expenses and other current assets
            
            
            9,421
            
            
            8,059Total
                current assets
            
            
            136,961
            
            
            117,185Property,
                plant and equipment, net
            
            
            17,904
            
            
            18,230Goodwill
            
            
            7,884
            
            
            7,884Intangible
                assets, net
            
            
            100,257
            
            
            100,838Other
                non-current assets
            
            
            2,983
            
            
            3,211Total
                assets
            
            $
            265,989
            
            $
            247,348**Liabilities
                and stockholders’ equity**Current
                liabilitiesAccounts
                payable
            
            $
            30,922
            
            $
            19,212Accrued
                expenses and other current liabilities
            
            
            24,179
            
            
            18,253Total
                current liabilities
            
            
            55,101
            
            
            37,465Long-term
                debt
            
            
            125,000
            
            
            137,500Deferred
                income taxes
            
            
            13,600
            
            
            10,754Other
                non-current liabilities
            
            
            8,873
            
            
            8,926Total
                liabilities
            
            
            202,574
            
            
            194,645Commitments
                and contingencies (Note 11)Stockholders’
                equityPreferred
                  stock - $0.01 par value; 10,000,000 shares authorized and none
                  issued and
                  outstanding
            
            
            -
            
            
            -Common
                stock - $0.01 par value; 100,000,000 shares authorized; 23,488,357 sharesissued
                and 22,914,498 outstanding at July 1, 2006
                and
                23,488,357 issued and outstanding at December 31,
                2005
            
            
            235
            
            
            235Additional
                paid-in capital
            
            
            60,088
            
            
            59,063Retained
                earnings (accumulated deficit)
            
            
            8,856
            
            
            (6,809
            )Accumulated
                other comprehensive income
            
            
            278
            
            
            214Treasury
                stock (573,859 shares at an average price of $10.53)
            
            
            (6,042
            )
            
            -Total
                stockholders’ equity
            
            
            63,415
            
            
            52,703Total
                liabilities and stockholders’ equity
            
            $
            265,989
            
            $
            247,348The
                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**
              
              **Six
                  months ended****July
                  1, 2006**
              
              **July
                  2, 2005**
              
              **July
                  1, 2006**
              
              **July
                  2, 2005**Net
                  sales
              
              $
              117,139
              
              $
              102,291
              
              $
              217,983
              
              $
              202,501Cost
                  of sales
              
              
              72,923
              
              
              64,283
              
              
              135,788
              
              
              130,173Gross
                  profit
              
              
              44,216
              
              
              38,008
              
              
              82,195
              
              
              72,328Selling,
                    general and administrative expenses
              
              
              26,121
              
              
              24,735
              
              
              51,443
              
              
              48,171Operating
                  income
              
              
              18,095
              
              
              13,273
              
              
              30,752
              
              
              24,157Interest
                  expense, net
              
              
              2,201
              
              
              8,007
              
              
              4,269
              
              
              10,904Income
                    before provision for income taxes
              
              
              15,894
              
              
              5,266
              
              
              26,483
              
              
              13,253Income
                  tax expense
              
              
              6,476
              
              
              2,703
              
              
              10,818
              
              
              6,219Net
                  income
              
              
              9,418
              
              
              2,563
              
              
              15,665
              
              
              7,034Preferred
                  stock dividends and changes in redemption value
              
              
              -
              
              
              (14,102
              )
              
              -
              
              
              (15,550
              )Net
                    income (loss) available to common stockholders
              
              $
              9,418
              
              $
              (11,539
              )
              $
              15,665
              
              $
              (8,516
              )Basic
                  earnings (loss) per common share
              
              $
              0.41
              
              $
              (0.58
              )
              $
              0.68
              
              $
              (0.43
              )Diluted
                  earnings (loss) per common share
              
              $
              0.39
              
              $
              (0.58
              )
              $
              0.65
              
              $
              (0.43
              )Basic
                  weighted average number of shares outstanding
              
              
              22,996,480
              
              
              19,800,000
              
              
              23,157,568
              
              
              19,800,000Diluted
                  weighted average number of shares outstanding
              
              
              24,118,332
              
              
              19,800,000
              
              
              24,276,912
              
              
              19,800,000The
                  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)*****Six
                  months ended****July
                  1, 2006**
              
              **July
                  2, 2005****Cash
                  flows from operating activities**Net
                  income
              
              $
              15,665
              
              $
              7,034Adjustments
                  to reconcile net income to net cashfrom
                  operating activitiesDepreciation
                  and amortization
              
              
              1,394
              
              
              4,253Amortization
                  of intangible assets
              
              
              581
              
              
              580Amortization
                  of deferred financing costs
              
              
              427
              
              
              5,561Stock-based
                  compensation
              
              
              1,045
              
              
              606Deferred
                  income taxes
              
              
              2,846
              
              
              3,712Other
                  non-cash items
              
              
              -
              
              
              488Net
                  changes in operating assets and liabilitiesAccounts
                  receivable
              
              
              (25,169
              )
              
              (27,882
              )Inventories
              
              
              (6,569
              )
              
              (12,843
              )Prepaid
                  expenses and other current and non-current assets
              
              
              (996
              )
              
              (4,147
              )Accounts
                  payable
              
              
              11,710
              
              
              8,676Accrued
                    expenses and other current and non-current
                    liabilities
              
              
              1,771
              
              
              (3,379
              )Income
                  taxes payable
              
              
              4,102
              
              
              4,528Net
                  cash from operating activities
              
              
              6,807
              
              
              (12,813
              )**Cash
                  flows from investing activities**Capital
                  expenditures
              
              
              (1,068
              )
              
              (950
              )Proceeds
                  from sale of assets
              
              
              -
              
              
              920Net
                  cash from investing activities
              
              
              (1,068
              )
              
              (30
              )**Cash
                  flows from financing activities**Term
                  loan facility repayments
              
              
              (12,500
              )
              
              (58,787
              )Purchase
                  of common stock for treasury
              
              
              (6,098
              )
              
              -Stock
                  options exercised
              
              
              36
              
              
              -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
              
              
              -
              
              
              445Borrowings
                  under revolving facility
              
              
              -
              
              
              10,000Net
                  cash from financing activities
              
              
              (18,862
              )
              
              (3,193
              )Effects
                  of exchange rate changes on cash
              
              
              (201
              )
              
              8Net
                  decrease in cash
              
              
              (13,324
              )
              
              (16,028
              )**Cash
                  and cash equivalents**Beginning
                  of period
              
              
              30,978
              
              
              23,212End
                  of period
              
              $
              17,654
              
              $
              7,184**Supplementary
                  disclosure of cash flow information**Cash
                  paid during the periodInterest
              
              $
              4,756
              
              $
              5,258Income
                  taxes
              
              $
              3,722
              
              $
              1,347


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 75 and 81 retail outlet stores as of July 1, 2006 and July 2, 2005,
      respectively, 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
      July
      1, 2006, the results of our operations for the three and six months ended July
      1, 2006 and July 2, 2005, and cash flows for the six months ended July 1, 2006
      and July 2, 2005. These adjustments consist of normal recurring adjustments.
      Operating results for the three and six-month periods ended July 1, 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 six-month periods ended July 1, 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**


**July
                  1, 2006**
              
              **December
                  31, 2005****Long-term
                  debt**Term
                  loan facility
              
              $
              125,000
              
              $
              137,500





At
      July
      1, 2006, we had $125,000 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 July 1,
      2006.




Payments
      due on long-term debt during each of the five years subsequent to July 1, 2006,
      are as follows:


Balance
                  of fiscal 2006
              
              $
              -In
                  fiscal 2007
              
              
              -In
                  fiscal 2008
              
              
              -In
                  fiscal 2009
              
              
              28,726In
                  fiscal 2010
              
              
              96,274





**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**
              
              **Six
                  months ended****July
                  1, 2006**
              
              **July
                  2, 2005**
              
              **July
                  1, 2006**
              
              **July
                  2, 2005**Service
                  cost
              
              $
              481
              
              $
              429
              
              $
              962
              
              $
              858Interest
                  cost
              
              
              347
              
              
              308
              
              
              694
              
              
              616Expected
                  return on plan assets
              
              
              (316
              )
              
              (274
              )
              
              (632
              )
              
              (548
              )Recognized
                  net actuarial loss
              
              
              33
              
              
              8
              
              
              66
              
              
              16Net
                  periodic benefit cost
              
              $
              545
              
              $
              471
              
              $
              1,090
              
              $
              942





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
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,045
                
                
                
                
                
                
                
                
                1,045Purchase
                    of common stock for treasury
                
                
                
                
                
                
                
                
                (579,400
                )
                
                (6,098
                )
                
                
                
                
                
                
                
                
                
                
                (6,098
                )Stock
                    options exercised
                
                
                
                
                
                
                
                
                5,541
                
                
                56
                
                
                (20
                )
                
                
                
                
                
                
                
                36**Comprehensive
                    income**Net
                    income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                15,665
                
                
                
                
                
                15,665Changes
                    during the period
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                64
                
                
                64Total
                    comprehensive income
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                15,729**Balance
                    at July 1, 2006**
                
                
                23,488,357
                
                $
                235
                
                
                (573,859
                )
                $
                (6,042
                )
                $
                60,088
                
                $
                8,856
                
                $
                278
                
                $
                63,415





**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 six months ended July 1, 2006, we repurchased 579,400
      shares of our common stock at a total cost of $6,098, at an average price per
      share of $10.53.





**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 $1,056, for stock
      options granted during the six-month period ended July 1, 2006 and July 2,
      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 $529 and $1,045 for
      the
      three and six months ended July 1, 2006, respectively, and $334 and $606 for
      the
      three and six months ended July 2, 2005, respectively.




The
      weighted average fair value of stock options granted during the six months
      ended
      July 1, 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 six months ended July 1, 2006. The weighted average fair value
      of
      stock options granted during the six months ended July 2, 2005 was $11.85.
      The
      fair value was estimated using the Black-Scholes option-pricing model based
      on
      the weighted average market price at grant date of $14.50 for the six months
      ended July 2, 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.




7





**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


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


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


***(unaudited)***





At
      July
      1, 2006, there was approximately $5,057 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 2.6 years and does not include the impact of any future stock-based
      compensation awards.





At
      July
      1, 2006, the aggregate intrinsic value of options outstanding and options
      exercisable was $22,488 and $13,083, 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 six months ended July 1, 2006
      and
      July 2, 2005 was estimated at the date of grant using a Black-Scholes
      option-pricing model, assuming the following assumptions.




**Six
                  months ended****July
                  1, 2006**
              
              
              **July
                  2, 2005**Dividend
                  yield
              
              
              0.0
              %
              
              0.0
              %Risk-free
                  interest rate
              
              
              4.89%
                  - 4.95
              %
              
              4.00%
                  - 4.10
              %Expected
                  life (years)
              
              
              4
                  - 5
              
              
              10Volatility
              
              
              39.40
              %
              
              0.0
              %





Changes
      in options outstanding are summarized as follows:


**Six
                  months ended****July
                  1, 2006****Weighted****average****Number**
              
              **exercise****of
                  options**
              
              **price**Options
                  outstanding,beginning
                  of year
              
              
              3,037,871
              
              $
              4.77Options
                  granted
              
              
              51,574
              
              
              11.42Options
                  exercised
              
              
              (5,541
              )
              
              3.64Options
                  cancelled or forfeited
              
              
              (84,219
              )
              
              8.15Options
                  outstanding, at July 1, 2006
              
              
              2,999,685
              
              $
              4.80Options
                  exercisable, at July 1, 2006
              
              
              1,378,380
              
              $
              1.91





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 July
      1,
      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
              
              
              1,023,476
              
              
              8.0
                  years
              
              $
              1.82
              
              
              480,350
              
              
              7.9
                  years
              
              $
              1.823.64
              
              
              1,017,935
              
              
              8.0
                  years
              
              
              3.64
              
              
              477,579
              
              
              7.9
                  years
              
              
              3.6411.11
                  - 17.00
              
              
              538,573
              
              
              6.2
                  years
              
              
              16.36
              
              
              750
              
              
              8.8
                  years
              
              
              14.500.01
              
              
              317,529
              
              
              6.3
                  years
              
              
              0.01
              
              
              317,529
              
              
              6.3
                  years
              
              
              0.010.06
              
              
              102,172
              
              
              5.6
                  years
              
              
              0.06
              
              
              102,172
              
              
              5.6
                  years
              
              
              0.062,999,685
              
              
              
              
              
              
              
              
              1,378,380





**7** **.**  **COMPREHENSIVE
      INCOME**




The
      changes in comprehensive income are as follows:


**Six
                  months ended****July
                  1, 2006**
              
              **July
                  2, 2005**Net
                  income
              
              $
              15,665
              
              $
              7,034Foreign
                  currency translation adjustments (1)
              
              
              (201
              )
              
              8Interest
                  rate swaps, (net of tax)
              
              
              265
              
              
              170Comprehensive
                  income
              
              $
              15,729
              
              $
              7,212




(1)
            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 six months ended July 1, 2006 was
      40.7% and 40.8%, respectively, as compared to an effective income tax rate
      for
      the three and six months ended July 2, 2005 of 51.3% and 46.9%, respectively.
      The effective income tax rate for the three and six months ended July 2, 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**
              
              **Six
                  months ended****July
                  1, 2006**
              
              **July
                  2, 2005**
              
              **July
                  1, 2006**
              
              **July
                  2, 2005**Net
                  salesWholesale
              
              $
              102,639
              
              $
              87,526
              
              $
              193,022
              
              $
              177,749Retail
              
              
              14,500
              
              
              14,765
              
              
              24,961
              
              
              24,752Total
              
              $
              117,139
              
              $
              102,291
              
              $
              217,983
              
              $
              202,501Operating
                  incomeWholesale
              
              $
              16,447
              
              $
              12,411
              
              $
              29,766
              
              $
              24,759Retail
              
              
              1,648
              
              
              862
              
              
              986
              
              
              (602
              )Operating
                  income
              
              
              18,095
              
              
              13,273
              
              
              30,752
              
              
              24,157Interest
                  expense, net
              
              
              2,201
              
              
              8,007
              
              
              4,269
              
              
              10,904Income
                    before provision for income taxes
              
              $
              15,894
              
              $
              5,266
              
              $
              26,483
              
              $
              13,253Depreciation
                  and amortizationWholesale
              
              $
              658
              
              $
              2,340
              
              $
              1,264
              
              $
              4,064Retail
              
              
              342
              
              
              390
              
              
              711
              
              
              769Total
              
              $
              1,000
              
              $
              2,730
              
              $
              1,975
              
              $
              4,833Net
                  sales by geographic areaUnited
                  States
              
              $
              108,299
              
              $
              95,345
              
              $
              203,770
              
              $
              189,761International
              
              
              8,840
              
              
              6,946
              
              
              14,213
              
              
              12,740Total
              
              $
              117,139
              
              $
              102,291
              
              $
              217,983
              
              $
              202,501Intercompany
                  sales from wholesale to retail
              
              $
              4,266
              
              $
              1,388
              
              $
              6,620
              
              $
              3,029**July
                  1, 2006**
              
              **December
                  31, 2005**Identifiable
                  assetsWholesale
              
              $
              239,716
              
              $
              221,597Retail
              
              
              26,273
              
              
              25,751Total
              
              $
              265,989
              
              $
              247,348





At
      July
      1, 2006 and December 31, 2005, our five largest uncollaterized receivables
      represented approximately 64% and 53% of total accounts receivable,
      respectively. For the three months ended July 1, 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 months ended
      July 2, 2005. For the six months ended July 1, 2006 and July 2, 2005, two
      customer in the wholesale segment each accounted for more than 10% of our
      consolidated net sales.


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**
              
              **Six
                  months ended****July
                  1, 2006**
              
              **July
                  2, 2005**
              
              **July
                  1, 2006**
              
              **July
                  2, 2005**Net
                  income
              
              $
              9,418
              
              $
              2,563
              
              $
              15,665
              
              $
              7,034Less:
                  Preferred stock dividends andchanges
                  in redemption value
              
              
              -
              
              
              (14,102
              )
              
              -
              
              
              (15,550
              )Net
                  income (loss) available to commonstockholders
              
              $
              9,418
              
              $
              (11,539
              )
              $
              15,665
              
              $
              (8,516
              )Weighted
                  average number of common andcommon
                  equivalent shares outstanding:Basic
                    number of common shares outstanding
              
              
              22,996,480
              
              
              19,800,000
              
              
              23,157,568
              
              
              19,800,000Impact
                  of dilutive securities
              
              
              1,121,852
              
              
              -
              
              
              1,119,344
              
              
              -Dilutive
                    number of common and common equivalent shares
                    outstanding
              
              
              24,118,332
              
              
              19,800,000
              
              
              24,276,912
              
              
              19,800,000Basic
                  earnings (loss) per common share
              
              $
              0.41
              
              $
              (0.58
              )
              $
              0.68
              
              $
              (0.43
              )Diluted
                  earnings (loss) per common share
              
              $
              0.39
              
              $
              (0.58
              )
              $
              0.65
              
              $
              (0.43
              )




Options
      to purchase approximately 497,000 and 494,500 shares of common stock outstanding
      during the three and six months ended July 1, 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 1,343,688 and 1,328,126 shares of common stock
      outstanding during the three and six months ended July 2, 2005 respectively,
      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 July 1, 2006, we had purchase commitments
      of
      $77,435 and believe that we have adequate reserves for expected losses arising
      from all purchase commitments.





**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




**MAIDENFORM
      BRANDS, INC. AND SUBSIDIARIES**


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


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


***(unaudited)***





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


**July
                  1, 2006**
              
              **December
                  31, 2005**Accrued
                  wages, incentive compensation and payroll taxes
              
              $
              6,377
              
              $
              6,724Accrued
                  professional fees
              
              
              1,680
              
              
              1,249Accrued
                  trade promotions
              
              
              2,051
              
              
              2,277Federal,
                  state and local income taxes payable
              
              
              5,032
              
              
              930Accrued
                  other
              
              
              9,039
              
              
              7,073$
              24,179
              
              $
              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. The Company is currently evaluating the
      impact of adopting this interpretation.




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 significant 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. 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. In
      addition, the sale of shares in our July 2005 initial public offering resulted
      in another change in control for the purpose of Section 382; however, the annual
      limitation of our NOLs did not change. 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**
              
              **Six
                  months ended****July
                  1, 2006**
              
              **July
                  2, 2005**
              
              **July
                  1, 2006**
              
              **July
                  2, 2005****OPERATING
                  DATA: (in millions)**Wholesale
                  sales
              
              $
              102.6
              
              $
              87.5
              
              $
              193.0
              
              $
              177.7Retail
                  sales
              
              
              14.5
              
              
              14.8
              
              
              25.0
              
              
              24.8Net
                  sales
              
              
              117.1
              
              
              102.3
              
              
              218.0
              
              
              202.5Cost
                  of sales
              
              
              72.9
              
              
              64.3
              
              
              135.8
              
              
              130.2Gross
                  profit
              
              
              44.2
              
              
              38.0
              
              
              82.2
              
              
              72.3Selling,
                  general and administrative expenses
              
              
              26.1
              
              
              24.7
              
              
              51.4
              
              
              48.1Operating
                  income
              
              $
              18.1
              
              $
              13.3
              
              $
              30.8
              
              $
              24.2


**As
                  a percentage of net sales****Three
                  months ended**
              
              **Six
                  months ended****July
                  1, 2006**
              
              **July
                  2, 2005**
              
              **July
                  1, 2006**
              
              **July
                  2, 2005****OPERATING
                  DATA:**Wholesale
                  sales
              
              
              87.6
              %
              
              85.5
              %
              
              88.5
              %
              
              87.8
              %Retail
                  sales
              
              
              12.4
              
              
              14.5
              
              
              11.5
              
              
              12.2Net
                  sales
              
              
              100.0
              
              
              100.0
              
              
              100.0
              
              
              100.0Cost
                  of sales
              
              
              62.3
              
              
              62.9
              
              
              62.3
              
              
              64.3Gross
                  profit
              
              
              37.7
              
              
              37.1
              
              
              37.7
              
              
              35.7Selling,
                  general and administrative expenses
              
              
              22.3
              
              
              24.1
              
              
              23.6
              
              
              23.8Operating
                  income
              
              
              15.5
              %
              
              13.0
              %
              
              14.1
              %
              
              12.0
              %


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**
              
              **Six
                  months ended****July
                  1, 2006**
              
              **July
                  2, 2005**
              
              **$
                  change**
              
              **%
                  change**
              
              **July
                  1, 2006**
              
              **July
                  2, 2005**
              
              **$
                  change**
              
              **%
                  change**Department
                  Stores andNational
                  Chain Stores
              
              $
              59.6
              
              $
              53.9
              
              $
              5.7
              
              
              10.6
              %
              $
              118.9
              
              $
              105.6
              
              $
              13.3
              
              
              12.6
              %Mass
                  Merchant
              
              
              31.0
              
              
              22.7
              
              
              8.3
              
              
              36.6
              %
              
              50.1
              
              
              45.2
              
              
              4.9
              
              
              10.8
              %Other
              
              
              12.0
              
              
              10.9
              
              
              1.1
              
              
              10.1
              %
              
              24.0
              
              
              26.9
              
              
              (2.9
              )
              
              -10.8
              %Total
                  Wholesale
              
              
              102.6
              
              
              87.5
              
              
              15.1
              
              
              17.3
              %
              
              193.0
              
              
              177.7
              
              
              15.3
              
              
              8.6
              %Retail
              
              
              14.5
              
              
              14.8
              
              
              (0.3
              )
              
              -2.0
              %
              
              25.0
              
              
              24.8
              
              
              0.2
              
              
              0.8
              %Total
                  Consolidated Net Sales
              
              $
              117.1
              
              $
              102.3
              
              $
              14.8
              
              
              14.5
              %
              $
              218.0
              
              $
              202.5
              
              $
              15.5
              
              
              7.7
              %





Our
      retail segment consists of outlet stores, clearance stores and internet sales.
      We had 75 stores as of July 1, 2006 compared to 81 stores as of July 2, 2005.
      In
      addition, our mix of products sold between bras, shapewear, and panties in
      the
      wholesale segment for the three and six months ended July 1, 2006 and July
      2,
      2005, respectively, is summarized below:


**Three
                  months ended**
              
              **Six
                  months ended****July
                  1, 2006**
              
              **July
                  2, 2005**
              
              **July
                  1, 2006**
              
              **July
                  2, 2005**Bras
              
              
              69
              %
              
              66
              %
              
              68
              %
              
              69
              %Shapewear
              
              
              21
              %
              
              22
              %
              
              22
              %
              
              19
              %Panties
              
              
              10
              %
              
              12
              %
              
              10
              %
              
              12
              %100
              %
              
              100
              %
              
              100
              %
              
              100
              %




***Net
      Sales***




Consolidated
      net sales increased by $14.8 million, or 14.5%, from $102.3 million for the
      three months ended July 2, 2005 to $117.1 million for the three months ended
      July 1, 2006. Consolidated net sales increased by $15.5 million, or 7.7%, from
      $202.5 million for the six months ended July 2, 2005 to $218.0 million for
      the
      six months ended July 1, 2006.





Wholesale
      segment net sales increased by $15.1 million, or 17.3%, from $87.5 million
      for
      the three months ended July 2, 2005 to $102.6 million for the three months
      ended
      July 1, 2006. Total international sales, which is included in the wholesale
      segment, increased by $1.9 million, or 27.5%, from $6.9 million for the three
      months ended July 2, 2005 to $8.8 million for the three months ended July 1,
      2006. 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 $5.7 million, or 10.6%,
      from $53.9 million for the three months ended July 2, 2005 to $59.6 million
      for
      the three months ended July 1, 2006. This increase was driven by strong sales
      from Flexees ® and
      Lilyette ® product
      lines, along with solid performance in Maidenform ® bras.
      Specific performance drivers for the second quarter included the successful
      introduction of the push-up and strapless product extensions from the
      Dream ® Collection, expansion of the One Fabulous Fit TM franchise with the introduction of Invisible Options TM ,
      and the
      product launches of Flexees ® One
      Fabulous Body ® and the
      zippered waistnippers. The Company also benefited from increased allotted
      selling space with certain customers. Our mass merchant channel net sales
      increased by $8.3 million, or 36.6%, from $22.7 million for the three months
      ended July 2, 2005 to $31.0 million for the three months ended July 1, 2006.
      Particular factors that contributed to these second quarter results included
      the
      expansion into a new product category with a mass customer, adding new styles
      for another customer’s private brand assortment and ongoing replenishment
      orders. Other net sales, which include sales to specialty retailers, off-price
      retailers and licensing income, increased by $1.1 million, or 10.1%, from $10.9
      million for the three months ended July 2, 2005 to $12.0 million for the three
      months ended July 1, 2006. This improvement was due to a new program with a
      specialty retailer and strength in our continuity programs with off-price
      retailers, while liquidation sales decreased.





18





Net
      sales
      in our wholesale segment increased by $15.3 million, or 8.6%, from $177.7
      million for the six months ended July 2, 2005 to $193.0 million for the six
      months ended July 1, 2006. International sales increased $1.5 million, or 11.8%,
      from $12.7 million for the six months ended July 2, 2005 to $14.2 million for
      the six months ended July 1, 2006. Of the $15.3 million increase in wholesale
      segment net sales during the six months ended July 1, 2006, $13.3 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, along with solid performance in Maidenform ® bras. An
      additional $4.9 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 $2.9 million from other, primarily as a result of a reduction in
      liquidation sales.




Net
      sales
      in our retail segment decreased $0.3 million, or 2.0%, from $14.8 million for
      the three months ended July 2, 2005 to $14.5 million for the three months ended
      July 1, 2006. Net sales in our retail segment increased $0.2 million, or 0.8%,
      from $24.8 million for the six months ended July 2, 2005 to $25.0 million for
      the six months ended July 1, 2006. We had 75 outlet stores as of July 1, 2006
      compared to 81 outlet stores as of July 2, 2005.  The decline in retail net
      sales caused by fewer stores was partially offset by increased internet sales
      and increased same store sales for the three months ended July 1, 2006, and
      more
      than offset by increased internet sales and increased same store sales for
      the
      six months ended July 1, 2006.  Same stores sales, defined as sales from
      stores open for more than one year, for the three month period ended July 1,
      2006 increased 2.6% and for the six month period ended July 1, 2006 increased
      4.3% largely driven by ongoing select promotional offerings, overall product
      mix
      and improved store inventory replenishment. Our internet sales increased by
      $0.1
      million, or 14.3%, from $0.7 million for the three months ended July 2, 2005
      to
      $0.8 million for the three months ended July 1, 2006. Our internet sales
      increased by $0.4 million, or 36.4%, from $1.1 million for six months ended
      July
      2, 2005 to $1.5 million for the six months ended July 1, 2006.





***Gross
      Profit***




Consolidated
      gross profit increased by $6.2 million, or 16.3%, from $38.0 million for the
      three months ended July 2, 2005 to $44.2 million for the three months ended
      July
      1, 2006. As a percentage of net sales, gross margins increased by 60 basis
      points from 37.1% for the three months ended July 2, 2005 to 37.7% for the
      three
      months ended July 1, 2006. Consolidated gross profit increased by $9.9 million,
      or 13.7%, from $72.3 million during the six months ended July 2, 2005 to $82.2
      million for the six months ended July 1, 2006. As a percentage of net sales,
      gross profit increased by 200 basis points from 35.7% for the six month periods
      ended July 2, 2005 to 37.7% for the six months ended July 1, 2006.





Gross
      profit as a percentage of sales for the wholesale segment was 34.3% for the
      three months ended July 2, 2005 as compared to 34.8% for the three months ended
      July 1, 2006. Gross margins in the second quarter of 2006 were driven by a
      change in product mix, new product innovation, sourcing initiatives and reduced
      liquidations. Our gross margins for the three months ended July 2, 2005 included
      unfavorable manufacturing variances as a result of plant closings, offset by
      favorable inventory variances from the absorption of overhead expenses. Gross
      profit as a percentage of sales for the wholesale segment was 33.4% for the
      six
      months ended July 2, 2005 as compared to 35.2% for the six months ended July
      1,
      2006. Our gross margins for the six months ended July 2, 2005 included
      unfavorable manufacturing variances as a result of plant closings, partially
      offset by favorable inventory variances from the absorption of overhead
      expenses.




Gross
      profit for the retail segment was 54.1% for the three months ended July 2,
      2005
      as compared to 58.6% for the three months ended July 1, 2006, and 52.0% for
      the
      six months ended July 2, 2005 as compared to 56.8% for the six months ended
      July
      1, 2006. Improved performance in the retail segment for both the three and
      six-month periods ended July 1, 2006 was largely driven by a change in overall
      product mix.





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




Consolidated
      SG&A increased by $1.4 million, or 5.7%, from $24.7 million for the three
      months ended July 2, 2005 to $26.1 million for the three months ended July
      1,
      2006. However, as a percentage of net sales, SG&A decreased from 24.1% for
      the three months ended July 2, 2005 to 22.3% for the three months ended July
      1,
      2006.





19





SG&A
      for our wholesale segment, which includes corporate-related expenses, increased
      by $1.7 million, or 9.7%, from $17.6 million for the three months ended July
      2,
      2005 to $19.3 million for the three months ended July 1, 2006. However, as
      a
      percentage of net sales, wholesale segment SG&A decreased from 20.1% for the
      three months ended July 2, 2005 to 18.8% for the three months ended July 1,
      2006. The increase of $1.7 million is a result of increased payroll and related
      benefits, including incentive and other compensation of $1.6 million, increased
      professional fees and other costs totaling $0.9 million associated primarily
      with being a public company and Sarbanes Oxley readiness, and increased other
      expenses of $0.9 million. Partially offsetting these increases were
      non-recurring initial public offering expenses of $1.3 million and severance
      expenses of $0.4 million that were incurred in the second quarter of 2005.
      Retail SG&A decreased by $0.3 million, or 4.2%, from $7.1 million for the
      three months ended July 2, 2005 to $6.8 million for the three months ended
      July
      1, 2006 due to operating 6 fewer stores.




Consolidated
      SG&A increased by $3.3 million, or 6.9%, from $48.1 million for the six
      months ended July 2, 2005 to $51.4 million for the six months ended July 1,
      2006. However, as a percentage of net sales, SG&A decreased from 23.8% for
      the six months ended July 2, 2005 to 23.6% for the six months ended July 1,
      2006.





SG&A
      for our wholesale segment, which includes corporate-related expenses, increased
      by $3.6 million, or 10.4%, from $34.6 million for the six months ended July
      2,
      2005 to $38.2 million for the six months ended July 1, 2006. As a percentage
      of
      net sales, wholesale segment SG&A increased from 19.5% for the six months
      ended July 2, 2005 to 19.8% for the six months ended July 1, 2006. The increase
      of $3.6 million is a result of increased payroll and related benefits, including
      incentive and other compensation of $4.0 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 $0.5
      million and increased other expenses of $0.8 million. Partially offsetting
      these
      increases were non-recurring initial public offering expenses of $1.9 million
      and severance expenses of $0.8 million that were incurred in the second quarter
      of 2005. Retail SG&A decreased by $0.3 million, or 2.2%, from $13.5 million
      for the six months ended July 2, 2005 to $13.2 million for the three months
      ended July 1, 2006 due to operating 6 fewer stores.





***Operating
      Income***




Our
      consolidated operating income increased by $4.8 million, or 36.1%, from $13.3
      million for the three months ended July 2, 2005 to $18.1 million for the three
      months ended July 1, 2006. Our consolidated operating income increased by $6.6
      million, or 27.3%, from $24.2 million for the six months ended July 2, 2005
      to
      $30.8 million for the six months ended July 1, 2006.





For
      the
      foregoing reasons, operating income for the wholesale segment increased by
      $4.0
      million, or 32.3%, from $12.4 million during the three months ended July 2,
      2005
      to $16.4 million during the three months ended July 1, 2006. Operating income
      for the wholesale segment increased by $5.0 million, or 20.2%, from $24.8
      million during the six months ended July 2, 2005 to $29.8 million during the
      six
      months ended July 1, 2006.





Also,
      for
      the reasons discussed above, operating income for the retail segment increased
      by $0.8 million, or 88.9%, from $0.9 million during the three months ended
      July
      2, 2005 to $1.7 million during the three months ended July 1, 2006. The retail
      segment’s operating income increased by $1.6 million from a loss of $0.6 million
      during the six months ended July 2, 2005 to $1.0 million during the six months
      ended July 1, 2006.





***Interest
      Expense, Net***




Interest
      expense, net decreased by $5.8 million, or 72.5%, from $8.0 million for the
      three months ended July 2, 2005 to $2.2 million for the three months ended
      July
      1, 2006. This decrease was primarily the result of deferred financing costs
      of
      $4.9 million, associated with the amendment of the Company’s credit facility on
      June 29, 2005, included in the prior year quarter. In addition, interest expense
      was lower as a result of a lower average debt outstanding and a lower average
      interest rate. The average balance of total debt outstanding decreased from
      $142.7 million for the three months ended July 2, 2005 to $129.8 million for
      the
      three months ended July 1, 2006, and the average interest rate during the three
      months ended July 2, 2005 was 7.4% as compared to a 6.5% average interest rate
      during the three months ended July 1, 2006.





20





Interest
      expense, net decreased $6.6 million, or 60.6%, from $10.9 million for the six
      months ended July 2, 2005 to $4.3 million for the six months ended July 1,
      2006.
      This decrease was a result of the reasons mentioned above. The average balance
      of total debt outstanding decreased from $144.6 million for the six months
      ended
      July 2, 2005 to $133.6 million for the six months ended July 1, 2006 and the
      average interest rate during the six months ended July 2, 2005 was 7.0% as
      compared to a 6.2% average interest rate during the six months ended July 1,
      2006.





***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 six-month periods ended July 1, 2006 was 40.7% and 40.8%,
      respectively, as compared to an effective income tax rate for the three and
      six-month periods ended July 2, 2005 of 51.3% and 46.9%, respectively. Our
      effective income tax rate for the three and six-month periods ended July 2,
      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 $2.6 million
      for the three months ended July 2, 2005 to $9.4 million for the three months
      ended July 1, 2006. Our net income increased by $8.7 million from $7.0 million
      for the six months ended July 2, 2005 to $15.7 million for the six months ended
      July 1, 2006.




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




For
      the
      three and six months ended July 2, 2005, preferred stock dividends and changes
      in redemption value, including a special preferred stock dividend, was $14.1
      million and $15.6 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 July 1, 2006 was $9.4 million as compared to a net loss of $11.5
      million for the three months ended July 2, 2005. The net income available to
      common stockholders for the six months ended July 1, 2006 was $15.7 million
      as
      compared to a net loss of $8.5 million for the six months ended July 2, 2005.





**Liquidity
      and Capital Resources**




*Operating
      activities.* Cash
      flows provided by operating activities were $6.8 million in the six months
      ended
      July 1, 2006 compared to cash flows used in operating activities of $12.8
      million in the six months ended July 2, 2005. This increase in cash provided
      by
      operating activities was primarily driven by an increase of $8.7 million in
      net
      income, a decrease in inventory and an increase in accrued expenses and other
      liabilities. The increase in inventories for the six months ended July 1, 2006
      was $6.6 million compared to an increase of $12.8 million for the six months
      ended July 2, 2005. The increase in accrued liabilities for the six months
      ended
      July 1, 2006 was $1.8 million compared to a decrease of $3.4 million for the
      six
      months ended July 2, 2005. The increase in inventory at July 2, 2005 was a
      result of several factors including, among other things, abnormally lower
      inventories at the end of fiscal 2004 caused by the China safeguard that
      restricted us from receiving certain of our bra products into inventory in
      December 2004. This resulted in normal inventory flow shifting from December
      2004 into the first six months ended July 2, 2005. Additionally, accrued
      expenses and other liabilities increased for the six months ended July 1, 2006
      when compared to the six months ended July 2, 2005 primarily due to timing
      of
      payments.




21




*Investing
      activities.* Cash
      flows used in investing activities were $1.1 million in the six months ended
      July 1, 2006 compared to no cash flows used in investing activities in the
      six
      months ended July 2, 2005. Capital expenditures for the six months ended July
      1,
      2006 was comparable when compared to the six months ended July 2, 2005. The
      increase was due to proceeds received from the sale of assets associated with
      the plants which were closed during the six months ended July 2,
      2005.




*Financing
      activities.* Cash
      flows used in financing activities were $18.9 million in the six months ended
      July 1, 2006 compared to cash flows used in financing activities of $3.2 million
      in the six months ended July 2, 2005. The increase in cash used in financing
      activities is primarily due to voluntary prepayments of our long term debt
      outstanding totaling $12.5 million and the repurchase of common stock for
      treasury stock as part of our $20 million stock repurchase program totaling
      $6.1
      million described below.





In
      February 2006, the Board of Directors approved a stock repurchase program in
      an
      amount up to $20 million. Through July 1, 2006, we repurchased $6.1 million
      of
      common stock at an average price of $10.53. 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
      July
      1, 2006, we had $125.0 million outstanding under our credit facility. At July
      1,
      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 July 1, 2006. We continued to de-leverage our balance sheet with $12.5
      million of voluntary debt prepayments during the six months ended July 1, 2006.
      With each debt prepayment, our amortization schedule is revised. Our next
      scheduled mandatory principal payment is not due until October 3, 2009. At
      July
      1, 2006, we had a debt to earnings before interest, taxes, depreciation and
      amortization (EBITDA) ratio of 2.42 to 1. If our debt to EBITDA ratio at year
      end December 31, 2006 is less than 2.5 to 1, there will be no mandatory excess
      cash flow prepayment for 2006. However, if our debt to EBITDA ratio at year
      end
      December 31, 2006 is 2.5 to 1 or greater, then all voluntary prepayments during
      2006 would be credited against the mandatory excess cash flow prepayment which
      would be due in March 2007.





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 July 1, 2006 and the future periods in which such
      obligations are expected to be settled in cash. In addition, the table reflects
      the timing of principal payments on outstanding borrowings.


**Balance
                  of****fiscal**
              
              **In
                  fiscal**
              
              **In
                  fiscal**
              
              **In
                  fiscal**
              
              **In
                  fiscal****(in
                  millions)**
              
              **2006**
              
              **2007**
              
              **2008**
              
              **2009**
              
              **2010**
              
              **Thereafter**
              
              **Total**Long-term
                  debt (1)
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              28.7
              
              $
              96.3
              
              $
              -
              
              $
              125.0Interest
                  on long-term debt (2)
              
              
              4.4
              
              
              8.7
              
              
              8.7
              
              
              8.7
              
              
              3.4
              
              
              -
              
              
              33.9Operating
                  leases
              
              
              2.8
              
              
              4.0
              
              
              3.1
              
              
              1.6
              
              
              1.0
              
              
              3.0
              
              
              15.5Total
                  financial obligations
              
              
              7.2
              
              
              12.7
              
              
              11.8
              
              
              39.0
              
              
              100.7
              
              
              3.0
              
              
              174.4Purchase
                  obligations (3)
              
              
              76.4
              
              
              1.0
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              77.4Total
                  financial obligations and commitments
              
              $
              83.6
              
              $
              13.7
              
              $
              11.8
              
              $
              39.0
              
              $
              100.7
              
              $
              3.0
              
              $
              251.8




*(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.*


*(2)
      The interest rate for the variable portion of long-term debt was the rate in
      effect at July 1, 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.*





22




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. The Company is currently evaluating the
      impact of adopting this interpretation.




**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 six-month periods ended July 1, 2006, $7.7 million and $13.2
      million, respectively, of our total net sales were in currencies other than
      the
      U.S. dollar. During the three and six-month periods ended July 1, 2006, our
      net
      sales were favorably impacted by $0.2 million and $0.1 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 July 1, 2006, our debt portfolio was composed
      of
      variable-rate debt of which we hedge approximately 24% to a fixed-rate. With
      respect to our variable-rate debt, a 1% change in interest rates would be
      immaterial.





23





*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
      going-forward 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.





**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 July 1, 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 July 1, 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.





24





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:


**Period**
              
              **Total
                  number of shares repurchased**
              
              **Average
                  price paid per share**
              
              **Total
                  number of shares repurchased as part of publicly announced program****(1)**
              
              **Maximum
                  dollar value of shares that may yet be repurchased under 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
              
              $
              13,901,652Total
              
              
              579,400
              
              $
              10.53
              
              
              579,400





(1) In
      February 2006, the Board of Directors approved a $20 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.





25





**Item
      3. Defaults Upon Senior Securities**


None.





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


We
      held
      our annual meeting of shareholders on May 25, 2006. The following actions were
      voted upon at the meeting:





1.
      The
      following individuals were elected to the Company’s Board of Directors, to hold
      office until the next annual meeting of shareholders. A total of 21,672,383
      shares were represented in person or by proxy at the Annual Meeting. The number
      of shares that were voted for, and that were withheld from, each of the director
      nominees is as follows:


**Director
                  Nominee**
              
              **Favor**
              
              **Withheld**David
                  B. Kaplan
              
              
              21,524,015
              
              
              148,368Thomas
                  J. Ward
              
              
              21,523,515
              
              
              148,868Norman
                  Axelrod
              
              
              21,563,462
              
              
              108,921Harold
                  F. Compton
              
              
              21,585,865
              
              
              86,518Barbara
                  Eisenberg
              
              
              21,583,312
              
              
              89,071Karen
                  Rose
              
              
              21,583,711
              
              
              88,672Adam
                  L. Stein
              
              
              21,541,915
              
              
              130,468





2.
      The
      shareholders approved the re-appointment of PricewaterhouseCoopers LLP as the
      Company’s independent public accountants for the 2006 fiscal year by a vote of
      20,838,272 favor, 7,518 against and 826,593 abstained.





**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





26


**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.
              (Registrant)Date:
                August 9, 2006
            By:
            /s/
                Dorvin D. LivelyName:
                Dorvin D. LivelyTitle:
                Chief Financial Officer (principal financial and accounting
                officer)




27


**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





28