SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





x
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      EXCHANGE ACT OF 1934




For the
quarterly period ended October 3, 2009





OR





o
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
      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.)485F
      US Hwy 1 South, Iselin, NJ
              
              08830(Address
      of principal executive offices)
              
              (Zip
      Code)





(732)
621-2500


(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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).


Yes o                          No  o





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





Large
accelerated filer o       Accelerated
filer x     
  Non-accelerated filer o       Smaller
reporting company o


(Do not
check if smaller


reporting
company)





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





Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.





Class
                
                Outstanding
      at November 6, 2009[Common
      Stock, $0.01 par value per share]
                
                23,158,314
      shares





INDEX




PAGEPART
      I - FINANCIAL INFORMATIONItem
      1. Financial Statements (Unaudited)Condensed
      Consolidated Balance Sheets at October 3, 2009 and January 3,
      2009
                2Condensed
      Consolidated Statements of Income for the Three and Nine Months Ended
      October 3, 2009 and September 27, 2008
                3Condensed
      Consolidated Statements of Cash Flows for the Nine Months Ended October 3,
      2009 and September 27, 2008
                4Notes
      to the Condensed Consolidated Financial Statements
                5Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations
                13Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
                22Item
      4. Controls and Procedures
                23PART
      II - OTHER INFORMATIONItem1.
      Legal Proceedings
                24Item1A.
      Risk Factors
                24Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
                24Item
      3. Defaults Upon Senior Securities
                24Item
      4. Submission of Matters to a Vote of Security Holders
                24Item
      5. Other Information
                24Item
      6. Exhibits
                24


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)





October 3, 2009
                        
                        
                        January 3, 2009AssetsCurrent
      assetsCash
      and cash equivalents
                        
                        $
                        62,113
                        
                        
                        $
                        43,463Accounts
      receivable, net
                        
                        
                        63,608
                        
                        
                        
                        38,974Inventories
                        
                        
                        59,376
                        
                        
                        
                        65,039Deferred
      income taxes
                        
                        
                        11,654
                        
                        
                        
                        11,837Prepaid
      expenses and other current assets
                        
                        
                        11,801
                        
                        
                        
                        13,852Total
      current assets
                        
                        
                        208,552
                        
                        
                        
                        173,165Property,
      plant and equipment, net
                        
                        
                        19,699
                        
                        
                        
                        19,577Goodwill
                        
                        
                        7,162
                        
                        
                        
                        7,162Intangible
      assets, net
                        
                        
                        96,487
                        
                        
                        
                        97,358Other
      non-current assets
                        
                        
                        793
                        
                        
                        
                        982Total
      assets
                        
                        $
                        332,693
                        
                        
                        $
                        298,244Liabilities
      and stockholders’ equityCurrent
      liabilitiesCurrent
      portion of long-term debt
                        
                        $
                        1,100
                        
                        
                        $
                        1,100Accounts
      payable
                        
                        
                        33,714
                        
                        
                        
                        31,667Accrued
      expenses and other current liabilities
                        
                        
                        22,992
                        
                        
                        
                        19,476Total
      current liabilities
                        
                        
                        57,806
                        
                        
                        
                        52,243Long-term
      debt
                        
                        
                        86,425
                        
                        
                        
                        87,250Deferred
      income taxes
                        
                        
                        21,128
                        
                        
                        
                        24,252Other
      non-current liabilities
                        
                        
                        11,847
                        
                        
                        
                        14,841Total
      liabilities
                        
                        
                        177,206
                        
                        
                        
                        178,586Commitments
      and contingencies (Note 10)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; 23,725,225 shares
      issued and 23,082,341 outstanding at October 3, 2009 and 23,488,357 issued
      and 22,496,003 outstanding at January 3, 2009
                        
                        
                        237
                        
                        
                        
                        235Additional
      paid-in capital
                        
                        
                        61,392
                        
                        
                        
                        60,567Retained
      earnings
                        
                        
                        107,553
                        
                        
                        
                        78,246Accumulated
      other comprehensive loss
                        
                        
                        (4,635
                        )
                        
                        
                        (5,408
                        )Treasury
      stock, at cost (642,884 shares at October 3, 2009 and 992,354 shares at
      January 3, 2009)
                        
                        
                        (9,060
                        )
                        
                        
                        (13,982
                        )Total
      stockholders’ equity
                        
                        
                        155,487
                        
                        
                        
                        119,658Total
      liabilities and stockholders’ equity
                        
                        $
                        332,693
                        
                        
                        $
                        298,244





The
accompanying notes are an integral part of these condensed consolidated
financial statements.


2





MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF INCOME


(in
thousands, except share and per share amounts)


(unaudited)





Three months ended
                
                
                Nine months endedOctober 3, 2009
                
                
                September 27, 2008
                
                
                October 3, 2009
                
                
                September 27, 2008Net
      sales
                
                $
                128,685
                
                
                $
                112,586
                
                
                $
                357,123
                
                
                $
                318,755Cost
      of sales
                
                
                84,050
                
                
                
                69,513
                
                
                
                234,845
                
                
                
                195,906Gross
      profit
                
                
                44,635
                
                
                
                43,073
                
                
                
                122,278
                
                
                
                122,849Selling,
      general and administrative expenses
                
                
                28,011
                
                
                
                27,880
                
                
                
                81,944
                
                
                
                81,575Operating
      income
                
                
                16,624
                
                
                
                15,193
                
                
                
                40,334
                
                
                
                41,274Interest
      expense, net
                
                
                494
                
                
                
                1,014
                
                
                
                1,794
                
                
                
                3,326Income
      before provision for income taxes
                
                
                16,130
                
                
                
                14,179
                
                
                
                38,540
                
                
                
                37,948Income
      tax expense
                
                
                94
                
                
                
                5,734
                
                
                
                9,233
                
                
                
                15,657Net
      income
                
                $
                16,036
                
                
                $
                8,445
                
                
                $
                29,307
                
                
                $
                22,291Basic
      earnings per common share
                
                $
                0.70
                
                
                $
                0.38
                
                
                $
                1.29
                
                
                $
                1.00Diluted
      earnings per common share
                
                $
                0.67
                
                
                $
                0.36
                
                
                $
                1.24
                
                
                $
                0.95Basic
      weighted average number of shares outstanding
                
                
                22,861,486
                
                
                
                22,428,698
                
                
                
                22,640,594
                
                
                
                22,386,561Diluted
      weighted average number of shares outstanding
                
                
                23,826,097
                
                
                
                23,461,633
                
                
                
                23,593,985
                
                
                
                23,443,488





The
accompanying notes are an integral part of these condensed consolidated
financial statements.


3





MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(in
thousands)


(unaudited)





Nine months endedOctober 3, 2009
                    
                    
                    September 27, 2008Cash
      flows from operating activitiesNet
      income
                    
                    $
                    29,307
                    
                    
                    $
                    22,291Adjustments
      to reconcile net income to net cash from operating
    activitiesDepreciation
      and amortization
                    
                    
                    2,651
                    
                    
                    
                    2,690Amortization
      of intangible assets
                    
                    
                    871
                    
                    
                    
                    871Amortization
      of deferred financing costs
                    
                    
                    138
                    
                    
                    
                    142Stock-based
      compensation
                    
                    
                    1,774
                    
                    
                    
                    1,117Deferred
      income taxes
                    
                    
                    (3,191
                    )
                    
                    
                    3,874Excess
      tax benefits related to stock-based compensation
                    
                    
                    (2,349
                    )
                    
                    
                    (60
                    )Bad
      debt expense
                    
                    
                    214
                    
                    
                    
                    1,102Other
      non-cash items
                    
                    
                    (2,478
                    )
                    
                    
                    -Net
      changes in operating assets and liabilitiesAccounts
      receivable
                    
                    
                    (24,599
                    )
                    
                    
                    (7,454
                    )Inventories
                    
                    
                    5,807
                    
                    
                    
                    5,923Prepaid
      expenses and other current and non-current assets
                    
                    
                    929
                    
                    
                    
                    (235
                    )Accounts
      payable
                    
                    
                    2,034
                    
                    
                    
                    (3,812
                    )Accrued
      expenses and other current and non-current liabilities
                    
                    
                    3,962
                    
                    
                    
                    (976
                    )Income
      taxes payable
                    
                    
                    3,201
                    
                    
                    
                    (2,160
                    )Net
      cash from operating activities
                    
                    
                    18,271
                    
                    
                    
                    23,313Cash
      flows from investing activitiesCapital
      expenditures
                    
                    
                    (2,692
                    )
                    
                    
                    (1,358
                    )Net
      cash from investing activities
                    
                    
                    (2,692
                    )
                    
                    
                    (1,358
                    )Cash
      flows from financing activitiesTerm
      loan repayments
                    
                    
                    (825
                    )
                    
                    
                    (825
                    )Proceeds
      from stock options exercised
                    
                    
                    1,877
                    
                    
                    
                    151Excess
      tax benefits related to stock-based compensation
                    
                    
                    2,349
                    
                    
                    
                    60Payments
      of employee withholding taxes related to equity awards
                    
                    
                    (162
                    )
                    
                    
                    (73
                    )Payments
      of capital lease obligations
                    
                    
                    (151
                    )
                    
                    
                    (135
                    )Net
      cash from financing activities
                    
                    
                    3,088
                    
                    
                    
                    (822
                    )Effects
      of exchange rate changes on cash
                    
                    
                    (17
                    )
                    
                    
                    (725
                    )Net
      increase in cash
                    
                    
                    18,650
                    
                    
                    
                    20,408Cash
      and cash equivalentsBeginning
      of period
                    
                    
                    43,463
                    
                    
                    
                    16,602End
      of period
                    
                    $
                    62,113
                    
                    
                    $
                    37,010Supplementary
      disclosure of cash flow informationCash
      paid during the periodInterest
                    
                    $
                    2,043
                    
                    
                    $
                    3,760Income
      taxes
                    
                    $
                    11,288
                    
                    
                    $
                    13,402





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, foreign distributors and licensees). In
addition, we operated 76 retail outlet stores as of October 3, 2009 and
September 27, 2008, 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
October 3, 2009, the results of our operations for the three and nine-month
periods ended October 3, 2009 and September 27, 2008, and cash flows for the
nine months ended October 3, 2009 and September 27, 2008. These adjustments
consist of normal recurring adjustments. Operating results for the three and
nine-month periods ended October 3, 2009 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 January 3, 2009 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 (“GAAP”).





These
condensed consolidated financial statements have been prepared in accordance
with Article 10 of Regulation S-X promulgated by the Securities and Exchange
Commission (“SEC”). Accordingly, certain information and disclosures normally
included in financial statements prepared in accordance with GAAP have been
condensed or omitted pursuant to the rules and regulations of the SEC. The
financial statements included herein should be read in conjunction with our
Annual Report on Form 10-K for the year ended January 3, 2009.





We
consider all highly liquid investments that have original maturities of three
months or less to be cash equivalents. Cash and cash equivalents, accounts
receivable, accounts payable and accrued expenses are reflected at fair value
because of the short-term maturity of these instruments. The carrying amount of
long-term debt at October 3, 2009 and January 3, 2009 approximates fair value as
a result of the variable interest rates being accrued and paid on the majority
of our debt.





Subsequent
events were evaluated through November 12, 2009, the date these financial
statements were issued.





2.           DEBT





October 3, 2009
                                
                                
                                January 3, 2009Long-term
      debtTerm
      loan facility
                                
                                $
                                87,525
                                
                                
                                $
                                88,350Current
      maturities of long-term debt
                                
                                
                                1,100
                                
                                
                                
                                1,100Non-current
      portion of long-term debt
                                
                                $
                                86,425
                                
                                
                                $
                                87,250




At
October 3, 2009, we had $87,525 outstanding under our term loan, and $0
outstanding under our revolving loan with approximately $48,145 available for
borrowings, after giving effect to $1,855 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. Principal payments on the term loan are payable in quarterly
installments of $275 with all remaining amounts due on the maturity date. We are
permitted to voluntarily prepay all or part of the principal balance of the term
loan with such prepayments applied to scheduled principal payments in inverse
order of their maturity. In addition, subject to specified exceptions and
limitations and reinvesting options, partial prepayments of outstanding loans
may be required with the proceeds of asset sales, sales of equity and debt
securities, and with certain insurance and condemnation proceeds.




5




MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 (in
thousands, except share and per share amounts)
 (unaudited)




Payments
due on long-term debt during each of the five years subsequent to October 3,
2009, are as follows:





Balance
      of fiscal 2009
                      
                      $
                      275In
      fiscal 2010
                      
                      
                      1,100In
      fiscal 2011
                      
                      
                      1,100In
      fiscal 2012
                      
                      
                      1,100In
      fiscal 2013
                      
                      
                      1,100Thereafter
                      
                      
                      82,850




3.           DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES





Our
financial assets and liabilities are measured using inputs from the three levels
of the fair value hierarchy. The three levels are as follows:





Level 1
-  Quoted prices in active markets for identical assets or
liabilities


Level 2
-  Quoted prices for similar assets and liabilities in active markets
or significant inputs that are observable


Level 3
-  Significant inputs that are unobservable (for example cash flow
modeling inputs based on assumptions)





The
following table summarizes liabilities measured at fair value on a recurring
basis at October 3, 2009 and January 3, 2009:





Level
      1
                    
                    
                    Level
      2
                    
                    
                    Level
      3LiabilitiesInterest
      rate swap as of October 3, 2009
                    
                    $
                    -
                    
                    
                    $
                    122
                    
                    
                    $
                    -Interest
      rate swap as of January 3, 2009
                    
                    
                    -
                    
                    
                    
                    581
                    
                    
                    
                    -




The fair
value is determined using inputs from observable market data that are actively
quoted and can be validated through external sources.





When
considered necessary, we may use financial instruments in the form of interest
rate swaps to minimize our interest rate fluctuations. It is our policy to
execute such instruments with banks we believe to be creditworthy and not to
enter into derivative financial instruments for speculative purposes. Effective
July 30, 2007, we entered into an interest rate swap agreement to receive
floating interest and pay fixed interest. This interest rate swap agreement is
designated as a cash flow hedge of the variable interest payments on a portion
of our variable rate term loan debt. For derivative instruments that are
designated and qualify as a cash flow hedge, the effective portion of the gain
or loss on the derivative is reported as a component of other comprehensive
income (loss) and reclassified into earnings in the same period or periods
during which the hedged transaction affects earnings. Gains and losses on the
derivative representing either hedge ineffectiveness or hedge components
excluded from the assessment of effectiveness are recognized in current
earnings. The interest rate swap agreement matures on December 31, 2009. At
October 3, 2009, $10,000 of our outstanding term loan debt was hedged under this
agreement with the remaining balance at variable rates. Cash payments or
receipts between us and the counterparties to the swap agreement are recorded as
an adjustment to interest expense.





The fair
value of the derivative instrument in the condensed consolidated statement of
financial position as of October 3, 2009 is summarized below:





Liability derivativesClassification
                                
                                Fair valueInterest
      rate swap
                                
                                Accrued
      expenses and other current liabilities
                                
                                $
                                122




6




MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (in
thousands, except share and per share amounts)
 (unaudited)




The
effect of the derivative instrument designated as a cash flow hedge on the
condensed consolidated financial statements for the three and nine-month periods
ended October 3, 2009 are as follows:





Three months ended
                  
                  
                  Nine months endedAmount of gain (loss)
                    recognized in
                    accumulated other
                    comprehensive income
                    (loss) on effective
                    hedges
                  
                  
                  Amount of gain (loss)
                    reclassified from
                    accumulated other
                    comprehensive income
                    (loss) into interest
                    expense
                  
                  
                  Amount of gain (loss)
                    recognized in
                    accumulated other
                    comprehensive income
                    (loss) on effective
                    hedges
                  
                  
                  Amount of gain (loss)
                    reclassified from
                    accumulated other
                    comprehensive income
                    (loss) into interest
                    expenseInterest
      rate swap
                  
                  $
                  109
                  
                  
                  $
                  -
                  
                  
                  $
                  459
                  
                  
                  $
                  -




There
were no significant gains or losses recognized in interest expense for the three
and nine-month periods ended October 3, 2009 for hedge ineffectiveness. During
the remainder of 2009, $76, net of tax of $46, will be reclassified to earnings
into interest expense.





4.           BENEFIT
PLANS AND POSTRETIREMENT PLANS




We
sponsor a defined benefit pension plan covering substantially all eligible
employees not covered by union plans. We also maintain post-retirement medical
benefit plans for certain eligible retirees for which post-retirement benefit
expense on a quarterly basis has been insignificant. The defined benefit pension
plan was frozen for current participants and closed to new entrants since
January 1, 2007.





The
components of net periodic benefit expense (income) charged to operations are as
follows:





Three months ended
                  
                  
                  Nine months endedOctober 3, 2009
                  
                  
                  September 27, 2008
                  
                  
                  October 3, 2009
                  
                  
                  September 27, 2008Interest
      cost
                  
                  $
                  280
                  
                  
                  $
                  277
                  
                  
                  $
                  840
                  
                  
                  $
                  831Expected
      return on plan assets
                  
                  
                  (286
                  )
                  
                  
                  (413
                  )
                  
                  
                  (858
                  )
                  
                  
                  (1,239
                  )Recognized
      net actuarial loss
                  
                  
                  44
                  
                  
                  
                  -
                  
                  
                  
                  180
                  
                  
                  
                  -Net
      periodic benefit expense (income)
                  
                  $
                  38
                  
                  
                  $
                  (136
                  )
                  
                  $
                  162
                  
                  
                  $
                  (408
                  )




7




MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (in
thousands, except share and per share amounts)
 (unaudited)
  5.           STOCKHOLDERS’
EQUITY





AccumulatedCommon
                          
                          
                          Treasury
                          
                          
                          Additional
                          
                          
                          
                          
                          
                          other
                          
                          
                          Totalstock
                          
                          
                          stock
                          
                          
                          paid-in
                          
                          
                          Retained
                          
                          
                          comprehensive
                          
                          
                          stockholders'Shares
                          
                          
                          $
                          
                          
                          Shares
                          
                          
                          $
                          
                          
                          capital
                          
                          
                          earnings
                          
                          
                          loss
                          
                          
                          equityBalance
      at January 3, 2009
                          
                          
                          23,488,357
                          
                          
                          $
                          235
                          
                          
                          
                          (992,354
                          )
                          
                          $
                          (13,982
                          )
                          
                          $
                          60,567
                          
                          
                          $
                          78,246
                          
                          
                          $
                          (5,408
                          )
                          
                          $
                          119,658Stock-based
      compensation
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          1,774
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          1,774Equity
      award activity
                          
                          
                          236,868
                          
                          
                          
                          2
                          
                          
                          
                          349,470
                          
                          
                          
                          4,922
                          
                          
                          
                          (949
                          )
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          3,975Comprehensive
      incomeNet
      income
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          29,307
                          
                          
                          
                          
                          
                          
                          
                          29,307Changes
      during the period
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          773
                          
                          
                          
                          773Total
      comprehensive income
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          30,080Balance
      at October 3, 2009
                          
                          
                          23,725,225
                          
                          
                          $
                          237
                          
                          
                          
                          (642,884
                          )
                          
                          $
                          (9,060
                          )
                          
                          $
                          61,392
                          
                          
                          $
                          107,553
                          
                          
                          $
                          (4,635
                          )
                          
                          $
                          155,487





6.           COMPREHENSIVE
INCOME




The
changes in comprehensive income are as follows:





Three months ended
                    
                    
                    Nine months endedOctober 3,
                    
                    
                    September 27,
                    
                    
                    October 3,
                    
                    
                    September 27,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Net
      income
                    
                    $
                    16,036
                    
                    
                    $
                    8,445
                    
                    
                    $
                    29,307
                    
                    
                    $
                    22,291Foreign
      currency translation adjustments (a)
                    
                    
                    235
                    
                    
                    
                    (593
                    )
                    
                    
                    390
                    
                    
                    
                    (725
                    )Interest
      rate swap, net of tax (b)
                    
                    
                    65
                    
                    
                    
                    118
                    
                    
                    
                    275
                    
                    
                    
                    117Pension
      related assets or liabilities, net of tax (c)
                    
                    
                    108
                    
                    
                    
                    -
                    
                    
                    
                    108
                    
                    
                    
                    -Comprehensive
      income
                    
                    $
                    16,444
                    
                    
                    $
                    7,970
                    
                    
                    $
                    30,080
                    
                    
                    $
                    21,683





(a)
            No tax benefit has been provided
      on the foreign currency translation adjustment due to management’s
      decision to reinvest the earnings of our foreign subsidiaries
      indefinitely.


(b)
            Net
      of tax of $44 and $184 for the three and nine-month periods ended October
      3, 2009, respectively. Net of tax of $78 for the three and nine-month
      periods ended September 27, 2008,
respectively.


(c)
            Net
      of tax of $72 for the three and nine-month periods ended October 3, 2009,
      respectively.





7.           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 (such changes would be recorded discretely in the quarter in
which they occurred); 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 (such changes would be recorded
discretely in the quarter in which they occurred); or impacts from tax law
changes (to the extent such changes effect our deferred tax assets/liabilities,
these changes would generally be recorded discretely in the quarter in which
they occurred). Our effective income tax rate for the three and nine-month
periods ended October 3, 2009 was 0.6% and 24.0%, respectively, as compared to
an effective income tax rate for the three and nine-month periods ended
September 27, 2008 of 40.4% and 41.3%, respectively. The lower effective income
tax rate in the three and nine month periods ending October 3, 2009 was due
primarily to a benefit of $6,069 resulting from the resolution of an Internal
Revenue Service (“IRS”) audit for the 2005 tax year, which was concluded during
the period. As a result, we have adjusted our liabilities for uncertain tax
positions under Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) 740.10.25 and recognized additional net deferred
tax assets, principally in relation to net operating losses.  The
remaining decrease in the effective income tax rate in the three and nine-month
periods ended October 3, 2009 was a result of reductions in taxes on income from
foreign operations.




8




MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (in
thousands, except share and per share amounts)
 (unaudited)




8.           SEGMENT
INFORMATION




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 outlet 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 to support each segment’s net sales. Intersegment sales and transfers
are recorded at cost and treated as a transfer of inventory.




9




MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (in
thousands, except share and per share amounts)
 (unaudited)




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





Three
      months ended
                
                
                Nine
      months endedOctober 3,
                  2009
                
                
                September 27,
                  2008
                
                
                October 3,
                  2009
                
                
                September 27,
                  2008Net
      salesWholesale
                
                $
                111,887
                
                
                $
                94,902
                
                
                $
                314,953
                
                
                $
                275,075Retail
                
                
                16,798
                
                
                
                17,684
                
                
                
                42,170
                
                
                
                43,680Total
                
                $
                128,685
                
                
                $
                112,586
                
                
                $
                357,123
                
                
                $
                318,755Operating
      incomeWholesale
                
                $
                13,905
                
                
                $
                12,282
                
                
                $
                37,025
                
                
                $
                37,626Retail
                
                
                2,719
                
                
                
                2,911
                
                
                
                3,309
                
                
                
                3,648Operating
      income
                
                
                16,624
                
                
                
                15,193
                
                
                
                40,334
                
                
                
                41,274Interest
      expense, net
                
                
                494
                
                
                
                1,014
                
                
                
                1,794
                
                
                
                3,326Income
      before provision for income taxes
                
                $
                16,130
                
                
                $
                14,179
                
                
                $
                38,540
                
                
                $
                37,948Depreciation
      and amortizationWholesale
                
                $
                876
                
                
                $
                869
                
                
                $
                2,749
                
                
                $
                2,595Retail
                
                
                244
                
                
                
                311
                
                
                
                773
                
                
                
                966Total
                
                $
                1,120
                
                
                $
                1,180
                
                
                $
                3,522
                
                
                $
                3,561Net
      sales by geographic areaUnited
      States
                
                $
                118,760
                
                
                $
                100,953
                
                
                $
                331,699
                
                
                $
                288,514International
      (a)
                
                
                9,925
                
                
                
                11,633
                
                
                
                25,424
                
                
                
                30,241Total
                
                $
                128,685
                
                
                $
                112,586
                
                
                $
                357,123
                
                
                $
                318,755Intercompany
      sales from Wholesale to Retail
                
                $
                4,640
                
                
                $
                4,086
                
                
                $
                11,389
                
                
                $
                9,997


October 3,
                                                                  2009
                                                                
                                                                
                                                                January 3,
                                                                  2009Identifiable
      assetsWholesale
                                                                
                                                                $
                                                                307,856
                                                                
                                                                
                                                                $
                                                                271,188Retail
                                                                
                                                                
                                                                24,837
                                                                
                                                                
                                                                
                                                                27,056Total
                                                                
                                                                $
                                                                332,693
                                                                
                                                                
                                                                $
                                                                298,244





(a)
International net sales are identified as international based on the location of
the customer.





At
October 3, 2009 and January 3, 2009, our five largest uncollateralized
receivables represented approximately 68% and 63% of total accounts receivable,
respectively.





For the
three and nine-month periods ended October 3, 2009, we had two customers, Kohl’s
and Wal-Mart, that each accounted for more than 10% of our consolidated net
sales. For the three and nine-month periods ended September 27, 2008, we had
three customers, Kohl’s, Wal-Mart and Macy’s, that each accounted for more than
10% of our consolidated net sales.




10




MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (in
thousands, except share and per share amounts)
 (unaudited)




9.           EARNINGS
PER SHARE




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





Three months ended
                      
                      
                      Nine months endedOctober 3, 2009
                      
                      
                      September 27, 2008
                      
                      
                      October 3, 2009
                      
                      
                      September 27, 2008Net
      income
                      
                      $
                      16,036
                      
                      
                      $
                      8,445
                      
                      
                      $
                      29,307
                      
                      
                      $
                      22,291Weighted
      average number of common and common equivalent shares
      outstanding:Basic
      number of common shares outstanding
                      
                      
                      22,861,486
                      
                      
                      
                      22,428,698
                      
                      
                      
                      22,640,594
                      
                      
                      
                      22,386,561Impact
      of dilutive securities
                      
                      
                      964,611
                      
                      
                      
                      1,032,935
                      
                      
                      
                      953,391
                      
                      
                      
                      1,056,927Dilutive
      number of common and common equivalent shares outstanding
                      
                      
                      23,826,097
                      
                      
                      
                      23,461,633
                      
                      
                      
                      23,593,985
                      
                      
                      
                      23,443,488Basic
      earnings per common share
                      
                      $
                      0.70
                      
                      
                      $
                      0.38
                      
                      
                      $
                      1.29
                      
                      
                      $
                      1.00Diluted
      earnings per common share
                      
                      $
                      0.67
                      
                      
                      $
                      0.36
                      
                      
                      $
                      1.24
                      
                      
                      $
                      0.95





For the
three-month periods ended October 3, 2009 and September 27, 2008, approximately
506,000 and 728,000 equity awards, respectively, were not included in the
computation of diluted earnings per share because of their anti-dilutive effect.
For the nine-month periods ended October 3, 2009 and September 27, 2008,
approximately 653,000 and 636,000 equity awards, respectively, were not included
in the computation of diluted earnings per share because of their anti-dilutive
effect.





10.        COMMITMENTS AND
CONTINGENCIES




Purchase
commitments




In the
normal course of business, we enter into purchase commitments for both finished
goods and raw materials. At October 3, 2009, we had purchase commitments of
$81,666 and believe that we have adequate reserves for any expected losses
arising from all purchase commitments.





Litigation





From
time-to-time we are party to legal actions that arise 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 condensed consolidated statements of financial position, results
of operations or cash flows.




11




MAIDENFORM
BRANDS, INC. AND SUBSIDIARIES
 NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 (in
thousands, except share and per share amounts)
 (unaudited)




11.         ACCRUED
EXPENSES AND OTHER CURRENT LIABILITIES





October 3, 2009
                  
                  
                  January 3, 2009Accrued
      wages, incentive compensation, payroll taxes and related
      benefits
                  
                  $
                  9,815
                  
                  
                  $
                  7,328Accrued
      customs duty
                  
                  
                  2,400
                  
                  
                  
                  1,795Accrued
      other
                  
                  
                  10,777
                  
                  
                  
                  10,353$
                  22,992
                  
                  
                  $
                  19,476





Other
accrued expenses and current liabilities include, among other items, accrued
severance, trade promotion, freight, accrued interest, inventory return accrual,
and professional fees.





12.         RECENTLY
ISSUED ACCOUNTING STANDARDS





In August
2009, the FASB issued authoritative accounting guidance (“Guidance”) regarding
how to value a liability when a quoted price in an active market is not
available for that liability. The changes as a result of this update are
effective for the first reporting period (including interim periods) beginning
after issuance, and adoption is not expected to have a significant impact on our
consolidated financial statements.





In June
2009, the FASB confirmed that the ASC will become the single official source of
authoritative GAAP (other than guidance issued by the SEC) for all
non-governmental entities. The ASC, which changes the referencing of financial
standards, supersedes current authoritative guidance and is effective for
interim and annual financial periods ending after September 15, 2009. The ASC is
not intended to change or alter existing GAAP and it is not expected to result
in a change in our accounting practices.





In May
2009, the FASB issued Guidance that establishes general standards of accounting
for and disclosures of subsequent events that occurred after the balance sheet
date but prior to the issuance of financial statements. This Guidance is
effective for financial statements issued for interim periods or fiscal years
ending after September 15, 2009. We have adopted the provisions of this guidance
at our quarter ended July 4, 2009.





In April
2009, the FASB issued Guidance, which is intended to provide additional
application guidance and enhanced disclosures regarding fair value measurements
and impairments of securities and additional guidelines for estimating fair
value in accordance with additional guidance related to the disclosure of
impairment losses on securities and the accounting for impairment losses on debt
securities. This guidance is effective for fiscal years and interim periods
ended after June 15, 2009. We have adopted the provisions of this guidance at
our quarter ended July 4, 2009 and the adoption did not have a significant
impact on our consolidated financial statements.





In
December 2008, the FASB issued Guidance to require disclosure of additional
information about assets held in a defined benefit pension or other
postretirement plans. Specifically, this guidance requires an employer to
disclose (i) investment policies and strategies including target allocation
percentages, (ii) major categories of plan assets, (iii) inputs and valuation
techniques used to measure the fair value of plan assets and (iv) significant
concentration of risk within plan assets. The additional disclosure requirements
are effective for fiscal years ending after December 15, 2009, with earlier
application permitted. We are currently evaluating the impact this guidance will
have on our consolidated financial statements.




12




Item
2. Management’s Discussion and Analysis of Financial Condition 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 assume no
obligation to update or revise publicly any forward-looking statements whether
as a result of new information, future events or otherwise. 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, foreign
distributors and licensees), our company-operated outlet stores and our
websites.





We sell
our products under some of the most recognized brands in the intimate apparel
industry. Our Maidenform®,Flexees®,
Lilyette®, Control
It!®,
Luleh®,
Rendezvous®,
Subtract® and
private brands are sold in department stores and national chain stores. Our
Sweet Nothings®,
Inspirations®,
Bodymates®, Self
Expressions® and
private brands are distributed through mass merchants. These other brands
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 certain 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, including general macro-economic conditions that may
affect our customers and 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
innovative and leading brands, sourcing and supply chain efficiencies, continued
growth of the mass merchant channel, pressure from retailers brought about by
the 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®,Control
      It!®,
      Luleh®,
      Rendezvous®,
      Subtract®
      and private brands;


•
              expanding
      distribution of our Donna Karan®
      and DKNY®brands;


•
              expanding
      shapewear awareness;


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


•
            expanding
      our international presence;


•
            marketing,
      rather than manufacturing our
brands;


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


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




13




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 trend toward consolidation of department stores. 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 these customers. We have customers located outside the United States
that purchase our Maidenform®,
Flexees® and
Lilyette® brands.
The majority of these net sales are included in the department stores and
national chain stores channel. In 2009, we have added new customers within this
channel as a result of our license agreement for the Donna Karan® and
DKNY® brands.
This agreement grants us the rights to design, source and market a full
collection of Donna Karan® and
DKNY® women’s
intimate apparel products.





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®,
Inspirations®,Bodymates®, Self
Expressions®, and
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 are likely to
increase over time. The volume and mix of net sales of our brands and of private
label in the mass merchant channel can vary from period to period based upon
strategic changes that our customers may implement from time to time. Net sales
to customers in the mass merchant channel that are located outside the United
States are included in this channel.





Other.Net sales from this
channel include sales to specialty retailers, off-price retailers, sales to
foreign distributors and royalty income from licensees. We participate in
private brands in the specialty retailer area as opportunities present
themselves and we continually evaluate this channel for
opportunities.





We will
selectively target strategic acquisitions, licensing opportunities and a brand
start-up to grow our consumer base and would utilize the acquired companies and
licenses to complement our current products, channels and geographic scope. We
believe that acquisitions and licenses can enhance our product offerings to
retailers and provide growth opportunities. 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 and licenses.
On May 6, 2008, we entered into a women’s intimate apparel license agreement for
the Donna Karan® and
DKNY®
brands.





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 macro-economic
conditions that can affect our consumers and ultimately their levels of overall
spending and choice of retail channel for their purchases. 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.comand 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 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 store 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.




14




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 recorded net of cooperative advertising allowances, sales
returns, sales discounts, and markdown allowances provided to our customers. Net
sales in our retail segment are recognized at the time the customer takes
possession of the merchandise at the point-of-sale in our stores and for our
internet sales, net sales are recognized when the products are shipped and title
passes to the customer.





Cost of Sales. We outsource
all manufacturing of the products we sell and, 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
Expenses (SG&A).Our SG&A include all of our marketing, product
development, selling, distribution and general and administrative expenses for
both the wholesale and retail segments (which include our retail outlet store
payroll and related benefits). General and administrative expenses include
management payroll, benefits, travel, information systems, accounting,
distribution, rent, insurance and legal costs. 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, are 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. For those uncertain
tax positions where it is "more likely than not" that a tax benefit will be
sustained, we have recorded the tax benefit. For those income tax positions
where it is not "more likely than not" that a tax benefit will be sustained, no
tax benefit has been recognized. Where applicable, associated interest and
penalties are recorded. 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.
For more information, see notes to the condensed consolidated financial
statements included elsewhere in this Quarterly Report on Form
10-Q.





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 sixty-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 was subject to a new annual limitation under Section
382. Subsequent to the acquisition in 2004, sales of our shares by others,
including the initial public offering in July 2005, have resulted in additional
changes in control for the purpose of Section 382; however, the annual
limitation of our NOLs has not changed. At January 3, 2009, we had approximately
$35.6 million of federal and state NOLs available for utilization in the years
from 2009 through 2023.




15


Results
of Operations





Three months ended
                    
                    
                    Nine months endedOctober 3,
                      2009
                    
                    
                    September 27,
                      2008
                    
                    
                    October 3,
                      2009
                    
                    
                    September 27,
                      2008OPERATING
      DATA: (in millions)Wholesale
      sales
                    
                    $
                    111.9
                    
                    
                    $
                    94.9
                    
                    
                    $
                    314.9
                    
                    
                    $
                    275.1Retail
      sales
                    
                    
                    16.8
                    
                    
                    
                    17.7
                    
                    
                    
                    42.2
                    
                    
                    
                    43.7Net
      sales
                    
                    
                    128.7
                    
                    
                    
                    112.6
                    
                    
                    
                    357.1
                    
                    
                    
                    318.8Cost
      of sales
                    
                    
                    84.0
                    
                    
                    
                    69.6
                    
                    
                    
                    234.8
                    
                    
                    
                    196.0Gross
      profit
                    
                    
                    44.7
                    
                    
                    
                    43.0
                    
                    
                    
                    122.3
                    
                    
                    
                    122.8Selling,
      general and administrative expenses
                    
                    
                    28.1
                    
                    
                    
                    27.8
                    
                    
                    
                    82.0
                    
                    
                    
                    81.5Operating
      income
                    
                    $
                    16.6
                    
                    
                    $
                    15.2
                    
                    
                    $
                    40.3
                    
                    
                    $
                    41.3





As a percentage of net salesThree months ended
                  
                  
                  Nine months endedOctober 3,
                    2009
                  
                  
                  September 27,
                    2008
                  
                  
                  October 3,
                    2009
                  
                  
                  September 27,
                    2008OPERATING
      DATA:Wholesale
      sales
                  
                  
                  86.9
                  %
                  
                  
                  84.3
                  %
                  
                  
                  88.2
                  %
                  
                  
                  86.3
                  %Retail
      sales
                  
                  
                  13.1
                  
                  
                  
                  15.7
                  
                  
                  
                  11.8
                  
                  
                  
                  13.7Net
      sales
                  
                  
                  100.0
                  
                  
                  
                  100.0
                  
                  
                  
                  100.0
                  
                  
                  
                  100.0Cost
      of sales
                  
                  
                  65.3
                  
                  
                  
                  61.8
                  
                  
                  
                  65.8
                  
                  
                  
                  61.5Gross
      profit
                  
                  
                  34.7
                  
                  
                  
                  38.2
                  
                  
                  
                  34.2
                  
                  
                  
                  38.5Selling,
      general and administrative expenses
                  
                  
                  21.8
                  
                  
                  
                  24.7
                  
                  
                  
                  22.9
                  
                  
                  
                  25.5Operating
      income
                  
                  
                  12.9
                  %
                  
                  
                  13.5
                  %
                  
                  
                  11.3
                  %
                  
                  
                  13.0
                  %




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 to whom we sell, 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®, Control
It!®,
Luleh®,
Rendezvous®,
Subtract® and
private brands on a worldwide basis to customers within this category. Within
the mass merchant channel, we sell brands such as Sweet Nothings®,
Inspirations®,
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, we include licensing income
as well as sales to foreign distributors in our other channel.





Our
retail segment consists of outlet stores and internet sales. We had 76 outlet
stores as of October 3, 2009 and September 27, 2008.




16





Three months ended
                  
                  
                  Nine months endedOctober 3,
                  
                  
                  September 27,
                  
                  
                  $
                  
                  
                  %
                  
                  
                  October 3,
                  
                  
                  September 27,
                  
                  
                  $
                  
                  
                  %2009
                  
                  
                  2008
                  
                  
                  change
                  
                  
                  change
                  
                  
                  2009
                  
                  
                  2008
                  
                  
                  change
                  
                  
                  change(in millions)
                  
                  
                  (in millions)Department
      stores andnational chain
      stores
                  
                  $
                  56.7
                  
                  
                  $
                  57.3
                  
                  
                  $
                  (0.6
                  )
                  
                  
                  (1.0
                  )%
                  
                  $
                  157.2
                  
                  
                  $
                  163.1
                  
                  
                  $
                  (5.9
                  )
                  
                  
                  (3.6
                  )%Mass
      merchants
                  
                  
                  33.8
                  
                  
                  
                  28.4
                  
                  
                  
                  5.4
                  
                  
                  
                  19.0
                  
                  
                  
                  99.5
                  
                  
                  
                  87.2
                  
                  
                  
                  12.3
                  
                  
                  
                  14.1Other
                  
                  
                  21.4
                  
                  
                  
                  9.2
                  
                  
                  
                  12.2
                  
                  
                  
                  132.6
                  
                  
                  
                  58.2
                  
                  
                  
                  24.8
                  
                  
                  
                  33.4
                  
                  
                  
                  134.7Total
      wholesale
                  
                  
                  111.9
                  
                  
                  
                  94.9
                  
                  
                  
                  17.0
                  
                  
                  
                  17.9
                  
                  
                  
                  314.9
                  
                  
                  
                  275.1
                  
                  
                  
                  39.8
                  
                  
                  
                  14.5Retail
                  
                  
                  16.8
                  
                  
                  
                  17.7
                  
                  
                  
                  (0.9
                  )
                  
                  
                  (5.1
                  )
                  
                  
                  42.2
                  
                  
                  
                  43.7
                  
                  
                  
                  (1.5
                  )
                  
                  
                  (3.4
                  )Total
      consolidated net sales
                  
                  $
                  128.7
                  
                  
                  $
                  112.6
                  
                  
                  $
                  16.1
                  
                  
                  
                  14.3
                  %
                  
                  $
                  357.1
                  
                  
                  $
                  318.8
                  
                  
                  $
                  38.3
                  
                  
                  
                  12.0
                  %





In
addition, our mix of products sold worldwide between bras, shapewear, and
panties for the three and nine-month periods ended October 3, 2009 and September
27, 2008, respectively, is summarized below:




Three months
      ended
                                            
                                            Nine months
      endedOctober 3,2009
                                            
                                            September 27,2008
                                            
                                            October 3,2009
                                            
                                            September 27,2008Bras
                                            
                                            
                                            62%
                                            
                                            58%
                                            
                                            64%
                                            
                                            64%Shapewear
                                            
                                            
                                            33
                                            
                                            33
                                            
                                            30
                                            
                                            29Panties
                                            
                                            
                                            5
                                            
                                            9
                                            
                                            6
                                            
                                            7100%
                                            
                                            100%
                                            
                                            100%
                                            
                                            100%




Net
Sales




Consolidated
net sales increased by $16.1 million, or 14.3%, from $112.6 million for the
three months ended September 27, 2008 to $128.7 million for the three months
ended October 3, 2009. Consolidated net sales increased by $38.3 million, or
12.0%, from $318.8 million for the nine months ended September 27, 2008 to
$357.1 million for the nine months ended October 3, 2009.





Wholesale
segment net sales increased by $17.0 million, or 17.9%, from $94.9 million for
the three months ended September 27, 2008 to $111.9 million for the three months
ended October 3, 2009. Total international net sales, which are included in the
wholesale segment, decreased by $1.7 million, or 14.7%, from $11.6 million for
the three months ended September 27, 2008 to $9.9 million for the three months
ended October 3, 2009. International sales were adversely affected by currency
exchange rates and lower sales in Canada and Russia, which were partially offset
by increased sales in the Benelux countries. Our department stores and national
chain stores channel net sales decreased by $0.6 million, or 1.0%, from $57.3
million for the three months ended September 27, 2008 to $56.7 million for the
three months ended October 3, 2009. The decrease in this channel is a result of
lost sales associated with customer bankruptcies filed in the third quarter of
2008. Partially offsetting this decrease were sales from our licensed brands
DKNY® and
Donna Karan® that we
launched in the first quarter of 2009 and the continued strength of our
shapewear business. Our mass merchant channel net sales increased by $5.4
million, or 19.0%, from $28.4 million for the three months ended September 27,
2008 to $33.8 million for the three months ended October 3, 2009. This increase
was primarily a result of strong sales growth in the shapewear and bra
categories. Other channel net sales, which include sales to specialty retailers,
off-price retailers, foreign distributors and licensing income, increased by
$12.2 million, or 132.6%, from $9.2 million for the three months ended September
27, 2008 to $21.4 million for the three months ended October 3, 2009. This
increase was due primarily to the replenishment of products based on our
patent-pending Total SolutionTM
technology with a specialty retailer and higher sales to off-price
retailers.





Wholesale
segment net sales increased by $39.8 million, or 14.5%, from $275.1 million for
the nine months ended September 27, 2008 to $314.9 million for the nine months
ended October 3, 2009. Total international net sales decreased by $4.8 million,
or 15.9%, from $30.2 million for the nine months ended September 27, 2008 to
$25.4 million for the nine months ended October 3, 2009, primarily resulting
from the reasons mentioned above. Our department stores and national chain
stores channel net sales decreased by $5.9 million, or 3.6%, from $163.1 million
for the nine months ended September 27, 2008 to $157.2 million for the nine
months ended October 3, 2009. This decrease reflected the weakness in this
channel as a result of the global economic slowdown, along with promotional
activities with retail partners to increase inventory productivity and lost
sales associated with customer bankruptcies filed in the third quarter of 2008.
Partially offsetting this decrease were sales from our licensed brands Donna
Karan® and
DKNY® that we
launched in the first quarter of 2009. Our mass merchant channel net sales
increased by $12.3 million, or 14.1%, from $87.2 million for the nine months
ended September 27, 2008 to $99.5 million for the nine months ended October 3,
2009. This increase was driven by the expansion of our Sweet Nothings® brand in
the bra and shapewear categories and ongoing replenishment of our
Inspirations® brand
which launched in the second quarter of 2008, offset by lower sales with a
warehouse customer and lower private brand sales with one mass customer. Other
channel net sales increased by $33.4 million, or 134.7%, from $24.8 million for
the nine months ended September 27, 2008 to $58.2 million for the nine months
ended October 3, 2009. This increase was due primarily to the replenishment of
products based on our patent-pending Total SolutionTM
technology with a specialty retailer and higher sales to off-price
retailers.




17




Net sales
in our retail segment decreased by $0.9 million, or 5.1%, from $17.7 million for
the three months ended September 27, 2008 to $16.8 million for the three months
ended October 3, 2009. Net sales in our retail segment decreased by $1.5
million, or 3.4%, from $43.7 million for the nine months ended September 27,
2008 to $42.2 million for the nine months ended October 3, 2009, due in part
from the weakness in the overall economy. Same store sales, defined as sales
from stores open more than one year, for the three and nine-month periods ended
October 3, 2009 decreased 3.0% and 5.6%, respectively. Our internet sales
decreased by $0.1 million, or 6.7%, from $1.5 million for the three months ended
September 27, 2008 to $1.4 million for the three months ended October 3, 2009.
Our internet sales for the nine-month periods ended October 3, 2009 and
September 27, 2008 remained unchanged at $3.9 million.





Gross
Profit




Consolidated
gross profit increased by $1.7 million, or 4.0%, from $43.0 million for the
three months ended September 27, 2008 to $44.7 million for the three months
ended October 3, 2009. However, as a percentage of net sales, consolidated gross
margins decreased by 350 basis points from 38.2% for the three months ended
September 27, 2008 to 34.7% for the three months ended October 3, 2009.
Consolidated gross profit decreased by $0.5 million, or 0.4%, from $122.8
million during the nine months ended September 27, 2008 to $122.3 million for
the nine months ended October 3, 2009. As a percentage of net sales, gross
profit decreased by 430 basis points from 38.5% for the nine months ended
September 27, 2008 to 34.2% for the nine months ended October 3,
2009.





Gross
profit as a percentage of net sales for the wholesale segment decreased by 340
basis points from 34.4% for the three months ended September 27, 2008 to 31.0%
for the three months ended October 3, 2009. This decrease was primarily driven
by the mix of customers and products, including a higher percentage of net sales
from our lower margin other channel. Gross profit as a percentage of net sales
for the wholesale segment was 35.4% for the nine months ended September 27, 2008
as compared to 31.0% for the nine months ended October 3, 2009. This decrease of
440 basis points is mainly a result of the reasons mentioned above along with
the effect of promotional activity to drive inventory productivity.





Gross
profit as a percentage of net sales for the retail segment increased by 70 basis
points from 58.8% for the three months ended September 27, 2008 to 59.5% for the
three months ended October 3, 2009, and increased 70 basis points from 58.1% for
the nine months ended September 27, 2008 to 58.8% for the nine months ended
October 3, 2009.





Selling,
General and Administrative Expenses (“SG&A”)




Consolidated
SG&A increased by $0.3 million, or 1.1%, from $27.8 million for the three
months ended September 27, 2008 to $28.1 million for the three months ended
October 3, 2009. However, as a percentage of net sales, SG&A decreased from
24.7% for the three months ended September 27, 2008 to 21.8% for the three
months ended October 3, 2009.





SG&A
for our wholesale segment, which includes corporate-related expenses, increased
by $0.5 million, or 2.5%, from $20.3 million for the three months ended
September 27, 2008 to $20.8 million for the three months ended October 3, 2009.
However, as a percentage of net sales, wholesale segment SG&A decreased from
21.4% for the three months ended September 27, 2008 to 18.6% for the three
months ended October 3, 2009. The increase of $0.5 million is primarily a result
of higher compensation costs of $1.5 million with a majority of this increase
associated with incentive compensation. Partially offsetting this increase was a
decrease in bad debt expense of $1.2 million associated with customer
bankruptcies, which occurred in the third quarter of 2008, along with other
costs reductions as we continue to manage our expenses. Retail SG&A
decreased by $0.2 million, or 2.7%, from $7.5 million for the three months ended
September 27, 2008 to $7.3 million for the three months ended October 3,
2009.





Consolidated
SG&A increased by $0.5 million, or 0.6%, from $81.5 million for the nine
months ended September 27, 2008 to $82.0 million for the nine months ended
October 3, 2009. However, as a percentage of net sales, SG&A decreased from
25.5% for the nine months ended September 27, 2008 to 22.9% for the nine months
ended October 3, 2009.





SG&A
for our wholesale segment increased by $0.8 million, or 1.3%, from $59.7 million
for the nine months ended September 27, 2008 to $60.5 million for the nine
months ended October 3, 2009. However, as a percentage of net sales, wholesale
segment SG&A decreased from 21.7% for the nine months ended September 27,
2008 to 19.3% for the nine months ended October 3, 2009. The increase of $0.8
million is a result of expenses associated with our licensed brands Donna
Karan® and
DKNY®, which
were launched in early 2009, higher compensation costs of $2.6 million primarily
resulting from incentive compensation, and increased professional fees of $1.2
million. These additional expenses were partially offset by a decrease in
advertising of $1.9 million, a decrease in bad debt of $0.9 million associated
with customer bankruptcies, which occurred in the third quarter of 2008, and
managed cost reductions across most operating departments. Retail SG&A
decreased by $0.3 million, or 1.4%, from $21.8 million for the nine months ended
September 27, 2008 to $21.5 million for the nine months ended October 3,
2009.




18




Operating
Income




Our
consolidated operating income increased by $1.4 million, or 9.2%, from $15.2
million for the three months ended September 27, 2008 to $16.6 million for the
three months ended October 3, 2009. Our consolidated operating income decreased
by $1.0 million, or 2.4%, from $41.3 million for the nine months ended September
27, 2008 to $40.3 million for the nine months ended October 3,
2009.





For the
foregoing reasons, operating income for the wholesale segment increased by $1.6
million, or 13.0%, from $12.3 million for the three months ended September 27,
2008 to $13.9 million for the three months ended October 3, 2009. Operating
income for the wholesale segment decreased by $0.7 million, or 1.9%, from $37.7
million during the nine months ended September 27, 2008 to $37.0 million during
the nine months ended October 3, 2009.





Also, for
the reasons discussed above, operating income for the retail segment decreased
by $0.2 million, or 6.9%, from $2.9 million for the three months ended September
27, 2008 to $2.7 million for the three months ended October 3, 2009. The retail
segment’s operating income decreased by $0.3 million, or 8.3%, from $3.6 million
during the nine months ended September 27, 2008 to $3.3 million for the nine
months ended October 3, 2009.





Interest
Expense, Net




Interest
expense, net, decreased by $0.5 million, or 50.0%, from $1.0 million for the
three months ended September 27, 2008 to $0.5 million for the three months ended
October 3, 2009 as we benefited primarily from a lower average interest rate for
the current quarter when compared to the same period last year. The average
balance of total debt outstanding decreased from $88.9 million for the three
months ended September 27, 2008 to $87.8 million for the three months ended
October 3, 2009, and the average interest rate during the three months ended
September 27, 2008 was 4.6% as compared to an average interest rate of 2.8%
during the three months ended October 3, 2009.





Interest
expense, net, decreased $1.5 million, or 45.5%, from $3.3 million for the nine
months ended September 27, 2008 to $1.8 million for the nine months ended
October 3, 2009. The decrease was a result of the reasons discussed above. The
average balance of total debt outstanding decreased from $89.2 million for the
nine months ended September 27, 2008 to $88.1 million for the nine months ended
October 3, 2009. The average interest rate during the nine months ended
September 27, 2008 was 5.1% as compared to an average interest rate of 3.3%
during the nine months ended October 3, 2009.





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 (such changes would be recorded discretely in the quarter in
which they occurred); changes to actual or forecasted permanent book to tax
differences; impacts from future tax settlements with state, federal or foreign
tax authorities (such changes would be recorded discretely in the quarter in
which they occurred); or impacts from tax law changes (to the extent such
changes affect our deferred tax assets/liabilities, these changes would
generally be recorded discretely in the quarter in which they occurred). Our
effective income tax rate for the three and nine-month periods ended October 3,
2009 was 0.6% and 24.0%, respectively, as compared to an effective income tax
rate for the three and nine-month periods ended September 27, 2008 of 40.4% and
41.3%, respectively. The lower effective income tax rate in the three and nine
month periods ending October 3, 2009 was due primarily to a resolution of an
Internal Revenue Service (“IRS”) audit for the year 2005, which was concluded
during the period. As a result, we have adjusted our liabilities for uncertain
tax positions under Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) 740.10.25 and recognized additional net deferred
tax assets, principally in relation to net operating losses.  Our effective
income tax rate, excluding this non-cash, one-time benefit of $6.1 million, for
the three and nine-month periods ended October 3, 2009 was 38.2% and 39.7%,
respectively.  This decrease in the effective income tax rate in the
three and nine-month periods ended October 3, 2009 was a result of reductions in
taxes on income from foreign operations.


19


Net
Income




For the
foregoing reasons, our net income increased by $7.5 million, or 88.2%, from $8.5
million for the three months ended September 27, 2008 to $16.0 million for the
three months ended October 3, 2009. Our net income increased by $7.0 million, or
31.4%, from $22.3 million for the nine months ended September 27, 2008 to $29.3
million for the nine months ended October 3, 2009. Excluding the non-cash,
one-time benefit mentioned above, net income for the three and nine-month
periods ended October 3, 2009 increased $1.4 million, or 16.5% and $0.9 million,
or 4.0%, respectively.





Liquidity
and Capital Resources




Operating activities. Cash
flows provided by operating activities were $18.3 million for the nine months
ended October 3, 2009 compared to cash flows provided by operating activities of
$23.3 million for the nine months ended September 27, 2008. This change was
primarily driven by the use of cash from operations resulting from changes in
working capital.  The increase in accounts receivable was due to
higher sales during the quarter, which were somewhat offset by higher cash
collections.





Investing activities. Cash
flows used in investing activities were $2.7 million for the nine months ended
October 3, 2009 compared to $1.4 million for the nine months ended September 27,
2008.  Cash flows used in investing activities for the nine months
ended October 3, 2009 and September 27, 2008 were for capital
expenditures.  This increase in capital expenditures was primarily due
to information technology upgrades, including the implementation of an
enterprise resource planning system and our e-commerce website.





Financing activities. Cash
flows provided by financing activities were $3.1 million for the nine months
ended October 3, 2009 compared to cash flows used in financing activities of
$0.8 million for the nine months ended September 27, 2008 as we benefited from
increased proceeds and tax benefits related to equity award
activity.





At
October 3, 2009 we had $87.5 million outstanding under our term loan, and $0
outstanding under our revolving loan with approximately $48.1 million available
for borrowings, after giving effect to $1.9 million of outstanding letters of
credit. Principal payments on the term loan are payable in quarterly
installments of $0.3 million with all remaining amounts due on the maturity
date. We are permitted to voluntarily prepay all or part of the principal
balance of the term loan with such prepayments applied to scheduled principal
payments in inverse order of their maturity. We were in compliance with all debt
covenants at October 3, 2009.





Below is
a summary of our actual performance under these financial
covenants:





October 3, 2009
                                  Covenant
                                
                                
                                January 3, 2009
                                  CovenantActual
      fixed charge coverage ratio
                                
                                2.36
      : 1.00
                                
                                
                                2.30
      : 1.00Minimum
      ratio required
                                
                                1.25
      : 1.00
                                
                                
                                1.25
      : 1.00Actual
      leverage ratio
                                
                                0.59
      : 1.00
                                
                                
                                0.90
      : 1.00Maximum
      ratio permitted
                                
                                4.00
      : 1.00
                                
                                
                                4.00
      : 1.00Actual
      consolidated capital expenditures
                                
                                $2,692
                                
                                
                                $3,197Maximum
      permitted
                                
                                $15,000
                                
                                
                                $13,158




The
global economic downturn and the continued volatility in the financial markets
could have a material adverse effect on our business. Further deterioration in
the financial markets could lead to business disruptions for certain of our
suppliers, contract manufacturers or trade customers and consequently, could
disrupt our business. However, we believe that our existing cash balances and
available borrowings under our revolving loan, along with our future cash flow
from operations, will enable us to meet our liquidity needs and capital
expenditure requirements for the foreseeable future.




20


Contractual Obligations,
Commitments and Off-Balance Sheet Arrangements




We have
various contractual obligations which are recorded as liabilities in our
condensed consolidated financial statements. Other items, such as certain
purchase commitments and other executory contracts, are not recognized as
liabilities in our condensed consolidated financial statements but are required
to be disclosed. 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 October 3, 2009 and the future periods in which such
obligations are expected to be settled in cash. In addition, the table below
reflects the timing of principal and interest payments on outstanding
borrowings.





Balance ofFiscal
                  
                  
                  In fiscal
                  
                  
                  In fiscal
                  
                  
                  In fiscal
                  
                  
                  In fiscal(in millions)
                  
                  2009
                  
                  
                  2010
                  
                  
                  2011
                  
                  
                  2012
                  
                  
                  2013
                  
                  
                  Thereafter
                  
                  
                  TotalLong-term
      debt
                  
                  $
                  0.3
                  
                  
                  $
                  1.1
                  
                  
                  $
                  1.1
                  
                  
                  $
                  1.1
                  
                  
                  $
                  1.1
                  
                  
                  $
                  82.8
                  
                  
                  $
                  87.5Interest
      on long-term debt (1)
                  
                  
                  0.6
                  
                  
                  
                  2.0
                  
                  
                  
                  1.9
                  
                  
                  
                  1.9
                  
                  
                  
                  1.9
                  
                  
                  
                  0.8
                  
                  
                  
                  9.1Obligations
      under capital lease (2)
                  
                  
                  0.1
                  
                  
                  
                  0.2
                  
                  
                  
                  0.1
                  
                  
                  
                  0.1
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  0.5Operating
      leases (3)
                  
                  
                  1.8
                  
                  
                  
                  6.3
                  
                  
                  
                  5.5
                  
                  
                  
                  4.7
                  
                  
                  
                  3.4
                  
                  
                  
                  6.8
                  
                  
                  
                  28.5Total
      financial obligations
                  
                  
                  2.8
                  
                  
                  
                  9.6
                  
                  
                  
                  8.6
                  
                  
                  
                  7.8
                  
                  
                  
                  6.4
                  
                  
                  
                  90.4
                  
                  
                  
                  125.6Other
      contractual obligations (4)
                  
                  
                  1.1
                  
                  
                  
                  4.2
                  
                  
                  
                  3.2
                  
                  
                  
                  5.2
                  
                  
                  
                  5.8
                  
                  
                  
                  13.4
                  
                  
                  
                  32.9Purchase
      obligations (5)
                  
                  
                  29.7
                  
                  
                  
                  52.0
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  81.7Total
      financial obligations and commitments
                  
                  $
                  33.6
                  
                  
                  $
                  65.8
                  
                  
                  $
                  11.8
                  
                  
                  $
                  13.0
                  
                  
                  $
                  12.2
                  
                  
                  $
                  103.8
                  
                  
                  $
                  240.2





(1)
The interest rate assumed for the variable portion of long-term debt was the
rate in effect at October 3, 2009.


(2)
Includes amounts classified as interest expense and SG&A under capital
leases.


(3)
The operating leases included in the above table consist of minimum rent
payments and do not include contingent rent based upon sales volume, or variable
costs such as maintenance, insurance or taxes.


(4)
Includes amounts classified as royalties, advertising and marketing
obligations.


(5)
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 and raw
material purchases. Amounts reflected in our condensed consolidated balance
sheets in accounts payable or other current liabilities are excluded from the
table above.





In
addition to the total contractual obligations and commitments included in the
table above, we have pension and post-retirement benefit obligations included in
other non-current liabilities of $5.2 million and $0.7 million, respectively at
October 3, 2009.





As of
October 3, 2009, our total liabilities for unrecognized tax benefits and related
interest and penalties amounted to $4.4 million (before federal and, if
applicable, state effect). Liabilities for unrecognized tax benefits have not
been included in the schedule of cash contractual obligations because we cannot
make a reasonable, reliable estimate of the amount and period of related future
payments of these liabilities.




Off-Balance Sheet Arrangements.Our most significant off-balance sheet financing arrangements as of
October 3, 2009 are non-cancelable operating lease agreements, primarily for our
company-operated outlet stores, our company headquarters and our leased
distribution centers located in Shannon, Ireland and Fayetteville, North
Carolina. We do not participate in any off-balance sheet arrangements involving
unconsolidated subsidiaries that provide financing or potentially expose us to
unrecorded financial obligations.


21


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 Condition and Results of Operations included in our
Annual Report on Form 10-K for the year ended January 3, 2009.





Recently
Issued Accounting Standards


In August
2009, the FASB issued authoritative accounting guidance (“Guidance”) regarding
how to value a liability when a quoted price in an active market is not
available for that liability. The changes as a result of this update are
effective for the first reporting period (including interim periods) beginning
after issuance, and adoption is not expected to have a significant impact on our
consolidated financial statements.





In June
2009, the FASB confirmed that the ASC will become the single official source of
authoritative U.S. generally accepted accounting principles (“GAAP”) (other than
guidance issued by the Securities and Exchange Commission) for all
non-governmental entities. The ASC, which changes the referencing of financial
standards, supersedes current authoritative guidance and is effective for
interim and annual financial periods ending after September 15, 2009. The ASC is
not intended to change or alter existing GAAP and it is not expected to result
in a change in our accounting practices.





In May
2009, the FASB issued Guidance that establishes general standards of accounting
for and disclosures of subsequent events that occurred after the balance sheet
date but prior to the issuance of financial statements. This Guidance is
effective for financial statements issued for interim periods or fiscal years
ending after September 15, 2009. We have adopted the provisions of this guidance
at our quarter ended July 4, 2009.





In April
2009, the FASB issued Guidance, which is intended to provide additional
application guidance and enhanced disclosures regarding fair value measurements
and impairments of securities and additional guidelines for estimating fair
value in accordance with additional guidance related to the disclosure of
impairment losses on securities and the accounting for impairment losses on debt
securities. This guidance is effective for fiscal years and interim periods
ended after June 15, 2009. We have adopted the provisions of this guidance at
our quarter ended July 4, 2009 and the adoption did not have a significant
impact on our consolidated financial statements.





In
December 2008, the FASB issued Guidance to require disclosure of additional
information about assets held in a defined benefit pension or other
postretirement plans. Specifically, this guidance requires an employer to
disclose (i) investment policies and strategies including target allocation
percentages, (ii) major categories of plan assets, (iii) inputs and valuation
techniques used to measure the fair value of plan assets and (iv) significant
concentration of risk within plan assets. The additional disclosure requirements
are effective for fiscal years ending after December 15, 2009, with earlier
application permitted. We are currently evaluating the impact this guidance will
have on our consolidated financial statements.





Item
3. Quantitative and Qualitative Disclosures about Market Risk





Foreign Currency Risk.We do
not believe that we have significant foreign currency transactional exposures.
For the three and nine-month periods ended October 3, 2009, $8.9 million and
$21.3 million, respectively, of our total net sales were in currencies other
than the U.S. dollar. During the three and nine-month periods ended October 3,
2009, our net sales were unfavorably impacted by $0.7 million and $2.8 million,
respectively, due to foreign exchange rates. Most of our purchases are
denominated in U.S. dollars. 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 the use of interest rate swaps. At October 3, 2009,
our debt portfolio was composed of variable-rate debt of which we hedge
approximately 11% to a fixed rate. With respect to our variable-rate debt, a 1%
change in interest rates would be immaterial.


22


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, and we
do not currently use derivative instruments in the management of these risks. On
a going-forward basis, fluctuations in crude oil prices or petroleum based
product prices may also influence the prices of the related items such as
chemicals, dyestuffs, man-made fibers and foam, and transportation costs. Raw
material price increases could 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 from our suppliers 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. In the future, volatile crude oil
and gasoline prices may impact our product and freight costs, consumer
confidence and disposable income.





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





Item
4. Controls and Procedures





(a) 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
defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the
period covered by this report. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that, as of such date, our
disclosure controls and procedures were effective as of October 3, 2009 to
ensure that the 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 SEC 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.





(b) Changes
in Internal Controls over Financial Reporting.





There was
no change in our internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act) during
our fiscal quarter ending October 3, 2009, that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.


23


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. While it is possible that our cash flows and results of
operations in a particular quarter or year could be materially affected, it is
our opinion that these matters will not have a material impact on our
consolidated financial position or ongoing results of operations and 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; 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 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; the sufficiency of cash to fund operations and capital expenditures;
and the influence of adverse changes in general economic conditions. 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 with the Securities and Exchange Commission on March 11,
2009.




There are
no material changes to the risk factors described in the Form 10-K filed on
March 11, 2009.




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





(a)
None.


(b)
None.


(c)
None.





Item
3. Defaults Upon Senior Securities


None.





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


None.





Item
5. Other Information


None.





Item
6. Exhibits


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


31.1
                Certification
      by Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a), as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      200231.2
                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
      200232.1
                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
  200232.2
                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


24


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:
      November 12, 2009
                By:
                /s/ Christopher W. ViethName:
      Christopher W. ViethTitle:
      Executive Vice President, Chief Operating Officer and
                  Chief
      Financial Officer (principal financial
officer)


25


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
      200231.2
              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
      200232.1
              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
  200232.2
              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